GOLD analysis 05.03.2020

Gold price futures fluctuated in a narrow range tilted to the upside during the Asian session to witness its bounce back for the fifth session from the lowest since February 7, with the dollar index rebounding to the eighth session in eleven sessions from the top since April 21, 2017 according to the reverse relationship Between them are on the threshold of the expected economic developments and data on Thursday by the American economy, which includes the talk of a member of the Federal Open Market Committee Robert Kaplan and in the shadows of market pricing for the global stimulus to reduce the economic damage to the Corona virus.

At exactly 04:05 AM GMT, the gold futures contracts for April delivery rose 0.10% to trade at $ 1,639.90 per ounce compared to the opening at $ 1,638.20 per ounce, knowing that the contracts started the trading session on a falling price gap after it concluded yesterday's trading At $ 1,643.00 an ounce, with the US dollar index down 0.01% to 97.33 compared to the opening at 97.34.

Investors are currently awaiting by the American economy the disclosure of the final reading of the productivity index and the cost of one work, and it is expected that the productivity index reading will show stability of growth at 1.4%, little changed from what it was in the initial reading for the fourth quarter and against a 0.2% contraction in the previous reading of the quarter Third, while the cost index reading may show an acceleration of growth to 1.5% compared to 1.4% in the initial reading and against a growth of 2.5% in the third quarter.

This comes in conjunction with the disclosure by the largest industrialized country in the world of a reading of the factory orders index, which may reflect a 0.2% decline against a rise of 1.8% in December, and with the release of the index of subsidy requests for the past week at the end of last month, which may reflect a decrease by 4 thousand requests to 215 thousand requests compared to 219 thousand requests in the previous weekly reading.

This also comes in conjunction with the issuance of the reading of the continuous benefit applications index for the week that elapsed on February 22, which may reflect a rise by one thousand applications to 1,725 ​​thousand applications compared to 1,724 thousand applications in the previous weekly reading, up to the speech of a member of the Federal Committee and President of Dallas Bank Federal Reserve Robert Kaplan On trade wars, the global economic slowdown and monetary policy at the Chicago Council on World Affairs.

Otherwise, yesterday we followed the report that touched on the fact that the US Congress approved a $ 8.3 billion financing package to support stakeholders in the fight against the Corona virus, and we also followed yesterday the International Monetary Fund Director Kristalina Georgieva announcing a $ 50 billion aid package for the markets of other countries Low income and emerging around the world in the form of interest-free loans as part of efforts to combat the global spread of the Corona virus.

In the same context, Georgieva, in her speech yesterday to the "CN-NBC", expressed that the Fund would like to see the use of those funds allocated as an aid package, first to enhance health care and then to the targeted financial stimulus program and to enhance liquidity in emerging markets, and that came The package of aid after many international central banks cut interest rates and benefited from their intention to expand the adoption of stimulus if necessary.

It is noteworthy that Bank of Japan Governor Harhiko Kuroda pledged earlier this week that the Bank of Japan 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.

This was followed by the Reserve Bank of Australia's resumption of interest rate cuts 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 the Bank of Australia The reserve for further reduction later, after fixing it in the previous three meetings and after reducing it three times by 25 basis points last year.

Also, we followed up on Tuesday, the Federal Reserve held a sudden meeting, 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 fixing them in the previous two meetings of the Federal Reserve at between 1.50% and 1. 75%, following its three-fold reduction of 25 basis points in previous meetings last year.

In the same vein, we also followed up on 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 and improved The labor market and that the committee has repeatedly stressed that the current monetary policy is appropriate.

Powell also noted at the time that several risks arose and the current situation became 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 course of the months and weeks ahead, 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 after US President Donald Trump repeatedly asked the Federal Reserve and Powell County to cut interest and expand stimulus.

Up to the Bank of Canada yesterday cut interest rates by 50 basis points for the first time since the beginning of 2009 to 1.25%, after fixing them in the previous ten meetings at 1.75%, which came in line with expectations, and the Canadian Central Bank statement also stated that the decision comes At a time when the economy is close to reaching the target of inflation, the risks looming as a result of the global spread of corona is the reason behind this rate cut.

Technical analysis

The gold price maintains its stability above 1633.60 level, and gets continuous positive support from the EMA50, noting that the stochastic has cleared its negative momentum to reach the oversold areas in the sale, which constitutes a positive incentive that we expect to contribute to push the price to resume the main bullish trend, which His next target is at 1689.33.

Thus, the positive scenario will remain valid and effective for the upcoming period, noting that a break of 1633.60 will press the price to drop towards 1599.10 initially, 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.