Gold analysis 04.03.2020

Gold price futures fluctuated in a narrow range tilted to the upside during the Asian session to witness its bounce back to the fourth session from the lowest since February 7, tolerating the US dollar index rebound to the second session from the lowest since January 8, according to the reverse relationship between them on The expected economic developments and data today, Wednesday, by the US economy, the largest economy in the world, and in light of the pricing of global stimulus markets to reduce the economic damage to the Corona virus.

At exactly 04:41 AM GMT, gold price futures for April delivery rose 0.16% to trade at $ 1,642.80 per ounce compared to the opening at $ 1,640.10 per ounce, knowing that the contracts started the trading session on a falling price gap after it concluded yesterday's trading At $ 1,644.40 an ounce, while the US dollar index rose 0.13% to 97.28 compared to the opening at 97.16.

Investors are currently awaiting by the American economy to disclose preliminary data for the labor market with the release of the index of change in private sector jobs, which may reflect a slowdown in the pace of job creation to 170 thousand added jobs compared to 291 thousand added jobs last January, hours before From the disclosure of the monthly report of jobs except agricultural and unemployment rates in addition to the hourly rate for the month of February after tomorrow, Friday.

This comes before we witness the issuance of the final reading of the Service Supply Institute index by Marquette about the United States, which may reflect the stability of the contraction at 49.4 unchanged from the initial reading of last month and against a widening at 53.4 in January, and before revealing the reading of the Institute's index Service supply, which may show a shrinkage in capacity to 54.9, compared to 55.5 in January.

We would like to point out that the importance of service provision lies in the fact that the service sector in America represents more than two-thirds of the gross domestic product, and finally the market is looking to unveil the Big Book, whose importance lies in the fact that it is issued two weeks before the meeting of the Federal Open Market Committee, which is scheduled to be held on 17-18 March is expected to reveal the Committee's expectations for the future of interest rates and the rate of growth, inflation and unemployment for the next three years.

This comes hours after the sudden meeting of the Federal Reserve yesterday, during which members of the Federal Open Market Committee decided to reduce the interest on federal funds by 50 basis points to between 1.00% and 1.25% after being installed in the previous two meetings of the Federal Reserve at between 1.50% And 1.75%, and after reducing it three times by 25 basis points in previous meetings last year.

In the same vein, we also followed yesterday, Tuesday, the press conference held by Federal Reserve Governor Jerome Powell after the decision to suddenly reduce markets to short-term benchmark interest rates, through which he noted that the decision came to support the American economy, while touching that over the past years wages increased The labor market has improved and the Committee has repeatedly stressed that the current monetary policy is appropriate.

Powell also expressed yesterday that several risks have arisen and the current situation has become in a state of uncertainty, which made the Federal Committee see the existence of fundamental changes that prompted it to take a reaction, adding that over the next months and weeks the committee will work to monitor markets and developments and take appropriate decisions to support the economy, He explained that the American economy is strong, but it is difficult to determine the extent of the negative effects of the spread of the Corona virus locally and globally.

Powell stressed during the press conference that the committee’s decision to cut interest at Tariq’s meeting for the first time since the global financial crisis that occurred more than a decade ago and by 50 basis points, which is rarely made by the Federal Reserve, is not a political decision but rather stems from a vision The Federal Committee for Current Events, and this came in the wake of US President Donald Trump's call repeatedly for the Federal Reserve and Powell County to cut interest and expand stimulus.

In another context, we also followed yesterday that the Reserve Bank of Australia resumed interest rate cuts during this year with a decrease of 25 basis points to the lowest level at all at 0.50%, which came in line with expectations, with the benefit through the Australian Central Bank’s statement of rates The interest is that the bank is ready for further reduction later, after fixing it in the previous three meetings, and after reducing it three times by 25 basis points last year.

We also followed up yesterday the report that touched on the fact that the European Central Bank officials expressed that the European Central is fully prepared to take appropriate measures when necessary and that they monitor developments related to the spread of the Corona virus, which would create risks to economic expectations and financial market conditions, in order to assess these developments and their impact on Both the Eurozone economies and the medium-term inflation target.

It is noteworthy that Bank of Japan Governor Harikiko Kuroda pledged earlier this week that the Japanese central bank will take the necessary steps to stabilize the financial markets, and the Japanese central bank has quickly demonstrated the type of measures it will take by offering to buy 500 billion yen ($ 4.6 billion) of government bonds. With the repurchase agreement to provide liquidity to market participants, which in turn contributed to allaying investor concerns regarding the risks of the spread of Corona.

Technical analysis

Gold confirmed the breach of 1633.60 level after the daily candle closed above it, to open the way for more gains in the short and intraday basis, supported by moving above the EMA50.

Thus, the bullish trend scenario will remain effective for the upcoming period, noting that a break of 1633.60 may pressure the price to test 1599.10 areas again before any new attempt to rise.

The expected trading range for today is between 1630.00 support and 1670.00 resistance.

Expected trend for today: bullish.