GOLD analysis 21.02.2020

Gold price futures fluctuated in a narrow range tilted to the upside during the Asian session to witness the highest since February 15, 2013 amid the rebound in the US dollar index for the second session from the top since April 21 of 2017 according to the inverse relationship between them on The expected economic developments and data on Friday by the US economy and in the shadows of investors' assessment of the spread of the Corona virus in exchange for stimulus from global central banks.

At exactly 04:12 AM GMT, gold futures for April delivery rose 0.25% to trade at $ 1,627.60 per ounce compared to the opening at $ 1,623.60 per ounce, knowing that the contracts started the trading session on an upward price gap after it concluded yesterday's trading At $ 1,620.50 an ounce, with the US dollar index down 0.01% to 99.84 compared to the opening at 99.85.

It is expected that the Federal Open Market Committee member and President of the Dallas Federal Reserve Bank Robert Kaplan will deliver the opening speech at a conference hosted by the Federal Reserve Bank of Dallas, before we witness the disclosure of the initial reading of the manufacturing PMI for the United States, the world's largest industrial country, which It may reflect the stability of the expansion at a value of 53.3, little changed from the previous reading last January.

This also comes in conjunction with the disclosure of the initial reading of the Markit Services PMI for America, which may show a shrinkage in value to 51.5 compared to 51.9 in the previous reading in January, and before we witness the disclosure of housing market data with the release of the Home Sales Index The list, which may show a decline of 1.7% to 5.46 million homes, compared to a rise of 3.6% at 5.54 million homes last December.

Up to the participation of two other members of the Federal Committee at the US Monetary Policy Forum 2020 in New York, each of the Deputy Governor of the Federal Reserve Bank of Elle Brenard, who is scheduled to participate in a seminar on monetary policy for the next recession, and we are witnessing the participation of another Deputy Governor of the Federal Reserve, Richard Clararda is in another panel discussion entitled "Hall of Mirrors: Feedback between Monetary Policy and Financial Markets".

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.

Other than that, we followed on Thursday, WHO Director-General Tidros Adhanum Gebresos told the media that the decrease in the number of coronavirus cases outside China "may not be the same for a long time", and this came in conjunction with South Korea's announcement of the first death from the deadly virus And the benefit of the rise of new confirmed cases there, sharply, specifically by 22% to a total of 104 cases infected with the Corona virus.

On the other hand, we also followed yesterday that the monetary policy makers of the People's Bank of China (the Chinese Central Bank) reduced the interest rate on lending for a year by 10 basis points and for a period of five years by 5 basis points, and that step came hours after the Chinese Central Bank last Monday By reducing the interest rate of the average term loans by ten basis points to 3.15% from 3.25%, amid the intensification of liquidity easing 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

Gold price managed to achieve our second target 1625.00 and is trying to surpass it now, to support the chances of achieving a further rise in the short term, as the price organizes within bullish channels that appear in the above chart, noting that our next target reaches 1668.00.

Consequently, the bullish trend scenario will remain likely during the upcoming sessions with support from the EMA50, taking into consideration that a break of 1611.20 will press the price to drop and test the support of the bullish channel at 1577.00 before any new attempt to rise.

The expected trading range for today is between 1615.00 support and 1650.00 resistance.

Expected trend for today: bullish.