Gold analysis 03.03.2020

Gold futures rose to witness their bounce back for the third session from the lowest since February 7, with the dollar index rebounding to the seventh session in nine sessions from the top since April 21, 2014 according to the inverse relationship between them after the decisions and directions of the Reserve Bank of Australia and the aspiration of today Tuesday to the events of the Group of Seven industrial meeting and the upcoming talk of a member of the Federal Open Market Committee and President of the Cleveland Bank Federal Reserve Loretta Mister in London and amid hopes of a global stimulus to reduce the economic damage to Corona.

At exactly 04:44 AM GMT, gold price futures for April delivery rose 0.95% to trade at $ 1,601.00 per ounce compared to the opening at $ 1,586.00 per ounce, knowing that the contracts started the trading session on a falling price gap after it concluded yesterday's trading At $ 1,594.80 an ounce, with the US dollar index down 0.15% to 97.41 compared to the opening at 97.57.

We have followed the Reserve Bank of Australia's resumption of interest rates a little while ago this year, with a 25 basis point cut to an absolute minimum of 0.50%, which came in line with expectations, with the benefit from the Australian Central Bank’s interest rate statement preparing for a bank Australia reserves for further cuts later, after fixing it in the previous three meetings and following its three-fold cut of 25 basis points last year.

Otherwise, the markets are looking to the activities of the G-7 conference, which will be attended by central bankers and finance ministers from Canada, Italy, France, Germany, Japan and the United Kingdom in addition to the United States of America, and the call will be led by US Treasury Secretary Stephen Munchen and Fed Governor Jerome Powell are among the efforts to coordinate the financial and economic response to Corona.

In another context, investors are looking forward to the talk of Federal Open Market Committee member and President of the Federal Reserve Bank of Cleveland Loretta Mester about economic expectations and monetary policy at the annual dinner of the Society of Professional Economists in London, and this comes hours after the US President criticized the Fed’s position and monetary policy The current, expressing the delay of the Fed and his Governor Powell in decision-making.

U.S. President Trump, through his Twitter account via his official account on Twitter, also expressed that Germany and a number of countries are pumping money to support their economy, and that the major central banks in other countries are more strict in making decisions, adding that due to many reasons the United States should have The lowest rate of interest, explaining that this was not done by the Federal Reserve and his Powell Governor.

Markets are currently pricing the Federal Reserve to resume cutting interest on federal funds this year and reducing them by 50 basis points to between 1.00% and 1.25% at the March 17-18 meeting, and after cutting them three times by 25 basis points last year To 1.50% and 1.75%, and looking forward also to the Federal Committee revealing its expectations for the future of interest rates and the rate of growth, inflation and unemployment for the next three years.

In another context, we followed yesterday the Governor of the Bank of Japan, Harikoiko Kuroda, pledging that the Bank of Japan will take the necessary steps to achieve stability in the financial markets, and the Japanese Central Bank has quickly demonstrated the type of measures that it will take by offering to buy 500 billion yen ($ 4.6 billion) of bonds. The government agreed to a buy-back agreement to provide liquidity to market participants, which in turn contributed to allaying investors ’concerns about the risks of the spread of Corona.

It is noteworthy that gold futures contracts witnessed Friday their worst daily performance since June 20, 2013 and their worst weekly performance since the beginning of November 2016, as they reflected their first monthly losses in three months with the transmission of bleeding of global stock indices for gold contracts at that time. , Where some of the report mentioned that investors sold gold to cover their positions in global stocks, which last week lost more than $ 5 trillion of its market value.

Given the developments of the Coronavirus, which started in Wuhan, China, it has so far killed more than 3,000 people and confirmed that there are at least 89,000 cases worldwide, and we followed yesterday the Director-General of the World Health Organization, Tedros Adhanom, stated that the situation in South Korea, Italy and Iran as well as Japan have become the organization's biggest concern.

Technical analysis

Gold price continues to fluctuate around the support of the bullish channel, and it needs to get enough positive momentum to push the price to resume the main bullish trend, which targets 1633.58 then 1689.33 levels mainly.

The stochastic oscillator is trying to get rid of the negative momentum to support the upside expectations, and in general, we continue to suggest the bullish trend for the next period unless the 1571.22 level is broken and stability remains with a daily closing below it.

The expected trading range for today is between 1585.00 support and 1635.00 resistance.

Expected trend for today: bullish.