Gold analysis 06.02.2020

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 four sessions from its highest since January 8, when it tested the highest for it since March 22, 2013 amid the rise in the US dollar index for the fourth session Respectively, according to the inverse relationship between them on the threshold of the expected economic developments and data today, Thursday, by the US economy, the largest economy in the world, and in the shadow of market assessments of efforts to contain and combat the Corona virus.

At exactly 04:16 AM GMT, gold price futures for April delivery decreased 0.15% to trade at $ 1,557.60 per ounce compared to the opening at $ 1,560.00 per ounce, knowing that the contracts started the trading session on a falling price gap after it concluded yesterday's trading At $ 1,562.80 an ounce, with the US dollar index rising 0.01% to 98.30 compared to the opening at 98.29.

Investors are currently awaiting by the American economy the disclosure of the initial reading of the single labor cost index, which reflects the slowdown in growth to 1.3% compared to 2.5% in the third quarter, while the initial reading of the productivity of the sectors other than agricultural may indicate a rise of 1.6% compared to a decline of 0.2% in the third quarter And, in conjunction with the release of the weekly reading of the benefit claims index, which may show a decrease of 1 thousand requests to 215 thousand applications.

Other than that, yesterday we followed the unconfirmed report that a team at Zhejiang University in China found a drug to treat the Coronavirus that started in Wuhan and killed only 73 people yesterday, which is the highest daily rate of increase in deaths from the virus, bringing the total death toll 563 people according to the Chinese Health Authority, while 3,694 new cases of the deadly virus have been reported, bringing the total number of people infected globally to 28,018 cases.

We would like to point out that the WHO spokesman noted yesterday, Wednesday, that there is currently no effective treatment for cases of coronavirus infection. In another context, we also followed yesterday. The Chinese President expressed that the containment of the Corona virus is going through a very critical stage and that all measures must be implemented Correctly fight and prevent coronavirus, while stating that his country will work to combat rumors related to the spread of the virus.

It is noteworthy that the Director of the IMF expressed last Tuesday that the Fund supports the efforts of China, the largest consumer of metals globally and the second largest economy in the world, in an attempt to contain the Corona virus, explaining that the Fund does not support medical efforts only, but also supports all economic and financial efforts adopted by the Chinese government, which Aim to address the economic damage caused by the deadly coronavirus.

This came hours after the People's Bank of China (the Central Bank of China) announced last Sunday 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.

It is noteworthy that the Goldman Sachs Financial Corporation expressed last Tuesday that the impact of the Corona virus on global growth will be limited during this year due to the measures taken by the Chinese government and the governments of other countries as part of efforts to contain and limit the spread of the deadly virus, and the institution stated that it expects growth to decrease The world is between 0.1% and 0.2% only, and the Chinese economy may see a slowdown in growth by 0.4% this year.

In another context, we followed this week’s report that touched on 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 of the impact of the Chinese economy, the second largest economy in the world after the United States, due to the spread of the virus Al-Taji, In the same vein, we also followed up on Monday the report that touched on the fact that the Chinese government intends to reduce its economic growth forecasts for the current year.

Technical analysis

Gold price hovers around 1554.10 level, and starts today with a slight bearish tendency to press this support, but since the price maintains the stability of the daily closing above this level, our expectations for the bullish trend will remain valid for the next period, pending a visit to 1575.90 initially.

It should be noted that confirming the break of 1554.10 will stop the positive scenario and press the price to achieve a new low, targeting the next correction level at 1536.50 directly.

The expected trading range for today is between 1540.00 support and 1570.00 resistance.

Expected trend for today: bullish.