Gold analysis 04.02.2020

Gold price futures fluctuated in a narrow range tilted to the upside during the Asian session to witness its bounce for the second consecutive session from its highest since January 8, when it tested its highest since March 22, 2013 amid the US dollar index rebounding for the third session of The lowest since 17 of this month, according to the inverse relationship between them, on the cusp of developments and economic data expected today by the American economy and in the shadow of market assessments of efforts to contain and combat the Corona virus.

At exactly 04:09 AM GMT, gold price futures for April delivery decreased 0.13% to trade at $ 1,581.50 per ounce compared to the opening at $ 1,579.50 per ounce, knowing that the contracts started the trading session on a falling price gap after it concluded yesterday's trading At $ 1,582.40 an ounce, with the US dollar index rising 0.01% to 97.83 compared to the opening at 97.82.

Investors are currently awaiting by the American economy, the largest economy in the world and the largest industrialized country in the world, the release of the factory orders index, which may reflect a 0.7% rise compared to a 0.7% decline last November, while the annual reading of the same index, excluding transportation, may show a slowdown in the pace Growth to 0.1% versus 0.3% in the prior annual reading for November.

Other than that, we followed last Sunday the People's Bank of China (the Chinese Central Bank) announced its intention to inject 1.2 trillion yuan ($ 173 billion) of liquidity into the market through repurchases in the open market (repo), and the Chinese Central Bank stated at the time that the total Liquidity in the system will be 900 billion yuan ($ 130 billion) more than in the same period last year 2019.

We would like to point out, because some financial market analysts have commented on this matter, that although this will reflect the largest addition of liquidity in the Chinese markets since 2004, it means merely injecting 150 billion yuan ($ 21.7 billion) in net liquidity and that a bank People's China may pump more liquidity later this week by facilitating lending (repo) or medium-term lending to ease concerns in financial markets.

This comes after the end of the Lunar New Year holiday in China at the beginning of this week, which was extended by three to ten days amid fears of the spread of the Corona virus, which started in the Chinese city of Wuhan, which has claimed more than 425 lives in China so far, in addition to Because there are more than twenty thousand cases infected with the virus in the world.

It is noteworthy that the Director-General of the World Health Organization, Tidros Adhanum, expressed yesterday, in his endeavors to allay fears of the spread of the Corona virus, which WHO announced last Thursday because of an international health emergency, that there is no need that calls for exceptional measures that will affect the global tourism trade situation, with his urging For countries to make decisions based on evidence and data, he informed him that the emergence of the disease has been confirmed in 23 countries outside China with 151 cases of the disease.

In another context, we followed up this week at the beginning of this week, which dealt with the fact that Beijing will ask Washington to be flexible regarding its agreed commitments in the first phase of the trade agreement, given the expectations that the Chinese economy, the second largest economy in the world and the second largest industrialized country globally, will be affected by Due to the spread of the coronavirus, in the same vein, we also followed yesterday the report that touched on the fact that the Chinese government intends to reduce its economic growth forecasts for the current year.

Technical analysis

The gold price continues to fluctuate around 1575.90 level, and we note that SMA 50 continues to support the price from below, while the stochastic indicator starts providing positive signals now, which supports the chances of resuming positive trades within the bullish channel that appears in the picture.

From here, we will maintain our expectations for the bullish trend for the coming period, awaiting the visit of 1611.20 as the next main target, noting that the continuation of the suggested bullish wave requires stability above 1575.90 and 1570.00 levels.

The expected trading range for today is between 1565.00 support and 1590.00 resistance.

Expected trend for today: bullish.