Gold analysis 21.01.2020

Gold futures rose during the Asian session to witness the highest since January 8, when I tested the highest for them since March 22, 2013 amid the US dollar index rebound for the second consecutive session from the highest since December 24, according to The inverse relationship between them amid the scarcity of economic data earlier this week by the US economy and with growing concern in Asia of a new strain of pneumonia in China, which led to a wave of risk aversion in the markets.

At exactly 04:34 AM GMT, gold price futures for February delivery rose 0.65% to trade at $ 1,567.40 per ounce compared to the opening at $ 1,557.30 per ounce, knowing that the contracts started the session’s trading on a falling price gap after yesterday's trading was concluded At $ 1,560.30 an ounce, with the US dollar index down 0.05% to 97.58 compared to the opening at 97.63.

We have followed the monetary policy makers ’decision with the Japanese Central Bank to keep negative interest rates at 0.10%, which came in line with expectations, with the disclosure of the Bank of Japan’s monetary policy statement, which reflected the Japanese central bank’s provision of more flexibility in monetary policy and raised its expectations for growth For the first time in a year, attention is now drawn to the events of the press conference that Bank of Japan Governor Haruhiko Kuroda will hold in Tokyo.

Other than that, yesterday we followed Moody's lowering its credit rating for Hong Kong to “AA3” from “AA2”, and yesterday we followed the International Monetary Fund cut its forecast for the pace of global economic growth for the current year 2020 and next 2021 in addition to the past 2019 from its previous expectations in October Last October, while noting that the uncertainty was declining with lower downside risks, it was emphasized that these risks still exist.

In the same context, the Director of the International Monetary Fund, Kristina Georgieva, warned of the possibility of the global economy experiencing an extended depression due to inequality and strikes in the financial sector, with her reporting that, according to a study conducted by the Fund, the current economic conditions are similar to the economic conditions in the twenties of the last century and those are The period when financial markets collapsed in 1929.

The Director of the International Monetary Fund, Georgieva, noted that despite the decrease in the gap of inequality between countries during the past two decades, inequality within countries has expanded rapidly recently, adding that there is a possibility of social unrest and fluctuations in the markets during this decade amid the emergence of new issues On the economic stage such as climate change and trade war.

International Monetary Fund Director Georgieva also expressed the fact that "the truce is not like peace," explaining that the signing by US President Donald Trump and Chinese Vice-Premier Liu is last Wednesday of the first stage of the trade deal in Washington, which reflected its breakthrough in trade relations between Washington and Beijing. Opportunities to exacerbate the trade war between the world's two largest economies "diminish, not eliminate" the negative impact.

Otherwise, the spread of a pneumonia-like virus in China led to a sudden bout of risk aversion in financial markets and prompted investors to transfer liquidity to safe havens, especially gold, especially after a Chinese health expert stated that the virus could be transmitted from person to person, after confirming the death of Four cases of the disease, which caused widespread concern that it is spreading on the eve of the Lunar New Year holiday in China.

Technical analysis

The price of gold made positive trades yesterday evening to settle around 1565.00, reinforcing expectations of the continuation of the bullish trend during the upcoming sessions, on its way to test the 1575.90 level which represents our first goal, noting that exceeding this level will push the price to 1611.20 as the next main station.

Therefore, the positive scenario will remain valid for the upcoming period unless the 1554.10 level is broken and stability below it.

The expected trading range for today is between 1555.00 support and 1585.00 resistance.

Expected trend for today: bullish.