Gold analysis 20.02.2020

Gold price futures fluctuated in a narrow range that tilted back down during the Asian session to witness its bounce for the second session from the top since March 21, 2013 amid the rise of the US dollar index to its highest since May 11 of 2017 according to the inverse relationship between them On the cusp of developments and economic data expected Thursday by the US economy, the largest economy in the world.

At exactly 04:04 AM GMT, gold price futures for April delivery decreased 0.14% to trade at $ 1,612.80 per ounce compared to the opening at $ 1,615.00 per ounce, knowing that the contracts started the trading session on an upward price gap after yesterday's trading was concluded At $ 1,611.80 an ounce, with the US dollar index rising 0.15% to 99.69 compared to the opening at 99.54.

Investors are currently waiting for the US economy to disclose data on the industrial sector with the release of the Philadelphia Industrial Index reading, which may reflect a shrinkage in breadth to 10.1 compared to 17.0 in January, and this comes in conjunction with the release of the aid claims index for the past week in 15 From February, which may reflect a rise of 5 thousand requests to 210 thousand requests compared to 205 thousand requests in the previous weekly reading.

This also comes in conjunction with the issuance of the reading of the continuous benefit requests index for the past week on the eighth of this week, which may reflect an increase of 19 thousand applications to 1,717 thousand applications compared to 1,698 thousand requests in the previous weekly reading, up to the disclosure of reading the leading indicators that may appear Up 0.4%, compared to a decline of 0.3% in December.

This comes hours after the minutes of the Federal Open Market Committee meeting held on January 28-29, during which members of the committee approved the maintenance of short-term benchmark interest rates between 1.50% and 1.75% for the third meeting, respectively. The minutes mentioned that the current monetary policy is appropriate and will remain in place for some time, indicating that the interest on federal funds remains unchanged during the coming period.

It is noteworthy that the Federal Reserve Governor Jerome Powell expressed during the press conference held after the meeting of the Federal Committee at the time, that the decisions of the committee depend on the economic data received, while touching that if inflation rates remain below the target of the Federal Reserve, this may lead to a reduction Expectations of inflation and thus reduce short-term interest rates, adding that inflation is expected to reach the target within the next three months.

Powell also noted at the time that the Federal Reserve is seeking to avoid the stability of inflation below the target of two percent, with his statement that there will be slight adjustments to the reserve reserve mandatory and that the general budget will continue to expand over time, adding that the Federal Reserve expects support from repurchases during April / This April, with the indication that it is regrettable that the Coruna virus is spreading and that it is expected to have a negative impact on the Chinese economy.

Powell also touched on the fact that the Federal Reserve is closely monitoring the situation regarding the spread of the Corona virus and its impact on the economy, while stating that there are some cautious optimism about the global economy, pointing out that the financial conditions are improving and trade tensions have declined, indicating that his country signed with China for the first stage of the trade agreement. This is in addition to the decrease in the chances of Britain leaving without an agreement from the European Union, which contributes to supporting the positive expectations.

On the other hand, monetary policy makers at the People's Bank of China (the Chinese Central Bank) have just decided to reduce the interest rate on lending for one year by 10 basis points and for a period of five years by 5 basis points, which was widely expected in the markets, and this came Hours after the Chinese Central Bank last Monday cut the average term loan interest by ten basis points to 3.15% from 3.25%, amid intensified liquidity measures and financing conditions in the face of financial pressures on the second largest economy in the world due to the spread of Corona.

Technical analysis

The gold price continues to fluctuate around 1611.20 level and is trying to breach it, noting that the stochastic index starts to get rid of its negative momentum, waiting for a positive momentum sufficient to push the price to overcome the mentioned level and confirm the trend towards our next target at 1625.00.

SMA 50 continues to support the price from below, to keep our expectations for the bullish direction for the coming period, taking into consideration that failure to achieve the required breach may pressure the price to test 1575.90 areas before any new attempt to rise.

The expected trading range for today is between 1600.00 support and 1625.00 resistance.

Expected trend for today: bullish.