Gold analysis 10.12.2019

Gold price futures fluctuated in a narrow range tilted toward decline during the Asian session, to witness its bounce back for the third session in five sessions from its highest since last November, condoning the decline in the US dollar index for the seventh session in eight sessions from its highest since October 15 Last October, according to the inverse relationship between them.

This follows the economic developments and data that were announced by the Chinese economy, the largest consumer of minerals in the world, and on the threshold of economic developments and data expected today by the US economy, the largest economy in the world, which includes launching the activities of the Federal Open Market Committee meeting in Washington, and with markets pricing the developments of the existing trade war. Between Washington and Beijing.

At exactly 03:24 AM GMT, gold price futures for February delivery fell 0.09% to trade at $ 1,465.00 per ounce compared to the opening at $ 1,466.30 per ounce, knowing that the contracts started the trading session on an upward price gap after yesterday's trading was concluded At $ 1,464.90 an ounce, while the US dollar index fell 0.04% to 97.61 compared to the opening at 97.65.

We have followed about the Chinese economy, the second largest economy in the world, to reveal the annual reading of the consumer price index, which showed accelerated growth to 4.5%, in line with expectations, compared to 3.8% in October, while the annual reading of the producer price index, which is an initial indication of inflationary pressures, Deflation narrowed to 1.4% versus 1.6%, beating expectations for a contraction of 1.5%.

On the other hand, investors are anticipating by the American economy to disclose the final reading of the productivity index and the cost of one business, amid expectations that the productivity index reading will show a decline of 0.3% compared to a decline of 0.1% in the initial reading for the third quarter and against a growth of 2.3% in the previous reading of the second quarter of last, While the cost index reading may show a slowdown in growth to 3.4% compared to 3.6% in the first reading and 2.6% in the second quarter.

Other than that, the markets are looking forward to the launching of the FOMC meeting, which takes place today and tomorrow, Wednesday in Washington, through which the short-term reference interest rates for the second consecutive meeting are expected to remain between 1.75% and 2.00% in conjunction with the disclosure of Committee members' expectations for growth, inflation and unemployment rates, as well as the future of interest rates for the next three years.

Up to the press conference to be held by Federal Reserve Governor Jerome Powell tomorrow, exactly half an hour after the FOMC meeting ends to comment on the decisions of the Federal Reserve monetary policy makers, which has been witnessing widespread criticism recently by US President Donald Trump who is calling on the Federal Reserve and his Powell Governor to go Move ahead to cut federal funds interest "to zero or less."

Looking at the developments in the trade war between the world's two largest economies, we followed yesterday. US Agriculture Secretary Sonny Perdue said, "We have a December 15 deadline for another slice of tariffs, I don't think these will be implemented and I think we might see some delay." In the wake of the report, which was touched upon at the weekend, that China had purchased five shipments of soybeans, estimated at 300,000 tons, from the United States.

It is reported that White House economic advisor Larry Kudlow noted Friday that Washington is close to concluding a trade agreement with Beijing, explaining that US President Donald Trump is seeking a good agreement with China, adding that December 15 is an important date regarding tariffs and that the American administration They use tariffs as part of their trade negotiations and push China to expand purchases of US agricultural products.

The markets are looking to Washington’s decision by the middle of the month or not to activate a 15% increase in customs duties on Chinese goods valued at $ 156 billion, and we would like to point out that the US President Trump expressed last week that he prefers in one way or another to postpone the conclusion of a trade deal with China after the presidential elections. 2020, with his statement that Beijing wants to conclude a deal at the moment with Washington and that "we will see if the deal will be correct or not."

Markets are also looking after tomorrow, Thursday, for the European Central Bank meeting, during which monetary policy makers at the European Central Bank are expected to decide to maintain interest rates at their current zero levels and stabilize the marginal lending rate at 0.25% in addition to remaining on the interest rate on negative deposits - 0.40% and proceed with the quantitative easing program at 20 billion euros per month, as long as necessary.

This comes before we also witness next Thursday the press conference of the European Central Bank Governor Christine Lagarde, which is her first press conference after she took over the post of former Governor Mario Draghi with the beginning of last month, and in conjunction with the actual parliamentary elections in Britain, which may be reflected directly on a file The United Kingdom leaves the European Union at the preset date, at the end of January.

Technical analysis

The gold price returns to fluctuation in a narrow path stable around 1460.00, and we notice that the recent trading is confined within an ascending sub channel that we believe constitutes a bearish continuation flag pattern, which means that breaking its support at 1456.00 will provide a strong negative incentive that supports the expectations of the descending correction wave extending beyond our first expected target at 1447.00 and up to 1413.10.

Consequently, we continue to favor the bearish trend for the next period unless the price rushes to breach the pivotal resistance level 1489.00 and hold above it, noting that a breach of 1467.00 may push the price to breach this resistance before any new attempt to decrease.

The expected trading range for today is between 1445.00 support and 1470.00 resistance.

Expected trend for today: bearish.