Gold analysis 05.02.2020

Gold price futures oscillated in a narrow range tilted back down 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 rise in the US dollar index 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 matter will reflect the largest addition of liquidity in Chinese markets since 2004, it only means pumping net liquidity 150 billion yuan ($ 21.7 billion) and that a bank Popular China may pump more liquidity later this week by facilitating repo lending or medium-term lending to ease anxiety 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 yesterday expressed in his efforts to allay fears of the spread of the Corona virus, which the organization announced last Thursday because of an international health emergency, that there is no need to call for exceptional measures that affect the global tourism trade situation, with his urge to take countries Its decisions are based on evidence and data, and it was reported to him that the outbreak had been confirmed in 23 countries outside China with 151 cases.

In another context, we followed this weekend, which touched upon the fact that Beijing will ask Washington to be flexible regarding its agreed commitments in the first stage 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 Because of 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 forecast for economic growth for this year.

Technical analysis

The price of gold ended yesterday's trading at 1554.10, and the day begins with an upward trend in a sign of the trend of the price to compensate for the losses of the previous sessions, supported by the positive signal provided by the stochastic indicator, so that the upside trend is likely for this day, pending testing the 1575.90 level initially.

We point out that breaching the target level will push the price to head towards 1611.20 as the next positive stop, noting that breaking 1554.10 will press the price to visit the next correction level which is located at 1536.50 directly.

The expected trading range for today is between 1550.00 support and 1580.00 resistance.

Expected trend for today: bullish.