Gold analysis 16.03.2020

Gold futures fell during the Asian session to witness their bounce for the sixth consecutive session from their highest since December 18, 2012 with the succession of the US dollar index bouncing to the sixth session from the lowest since September 27, 2018 according to the inverse relationship between them amid growing concerns From the global outbreak of the Corona virus.

This comes hours after the Bank of New Zealand suddenly cut interest by 75 basis points, and the Federal Reserve suddenly cut interest on federal funds by 100 basis points, bringing them back to their zero levels reached after the global financial crisis worsened for more than A decade and a half, I looked forward to the Bank of Japan meeting later in the day.

Other than that, we followed the Chinese economy, the largest consumer of metals globally, to disclose data on the industrial sector and retail sales in addition to labor market data, which reflected the worst performance of the industrial sector and retail sales in China and the high unemployment rates for them at all during the past month, and this comes on the cusp of developments And the expected economic data today, Monday, by the US economy, the largest economy in the world.

At exactly 03:59 AM GMT, gold price futures for April delivery decreased 1.11% to trade at $ 1,546.70 per ounce compared to the opening at $ 1,563.80 per ounce, knowing that the contracts started the trading session on an upward price gap after the week's trades were concluded The past at $ 1,516.70 an ounce, with the US dollar index rising 0.49% to 98.19 compared to the opening at 97.71.

The markets are currently looking to the decisions and directions of monetary policy makers at the Central Bank of Japan and the disclosure of the monetary policy statement of the Bank of Japan, which reflects the central bank’s provision of more flexibility and facilitation in monetary policy while remaining negative interest rates at 0.10%, before the launch of the press conference’s activities. It will be held by the Governor of the Bank of Japan in Tokyo.

This comes hours after the surprise meeting of the Reserve Bank of New Zealand in which monetary policy makers of the New Zealand Central Bank decided to cut interest rates by 75 basis points to 0.25% and keep them at this level, which is the lowest ever for a period of at least twelve months, While stating that in the event of further stimulus, the asset purchase program of government bonds would be preferred over another rate cut.

We also followed a short time ago, the surprising meeting of the Federal Reserve, which is the second in less than two weeks, which was also held on the 15th of this month after the previous sudden meeting on the 3rd of March in which the monetary policy makers of the Federal Reserve decided to return interest rates. The short-term benchmark is to zero levels reached in the wake of the worsening global financial crisis more than a decade ago.

The members of the Federal Open Market Committee reduced the interest on federal funds by 100 basis points to between zero levels and 0.25%, which they remained from 2008 until the meeting of 27-28 October 2015, after reducing them in the previous emergency meeting by 50 points. The basis is between 1.00% and 1.25%, and this comes in the wake of the committee members cutting interest three times by 25 basis points in previous meetings last year.

The Federal Reserve monetary policy statement stated that the decision to reduce will be effective from Monday 16 March, and that the Federal Open Market Committee will carry out repurchases of treasury bonds with a minimum of $ 500 billion per month and mortgage-backed securities of $ 200 billion At least monthly, provided that these purchases are made at the appropriate speed to support the smooth performance of the stock market, treasury and mortgage markets.

The statement also stated that the forward and night repurchase agreements are being carried out to ensure that the supply of reserves remains ample and support the smooth performance of the US dollar financing markets in the short term, and this came an hour and a half before the press conference held by Federal Reserve Governor Jerome Powell and minutes before the conference The reporter was held by US President Donald Trump and his deputy Mike Pence, as well as members of the Corona Virus Team.

This has been noted by Federal Reserve Governor Powell a little while ago that the American economy is still growing despite rapid developments and that the Corona virus has a clear impact on the American economy and the world, pointing out that the repercussions of the virus will be clear in the short term and affect economic expectations, adding that the global economic weakness will be It has a negative impact on US exports.

Powell said that in light of these developments, the Federal Committee decided to cut interest to zero levels and that it is expected to remain until the confirmation of the end of risks and the return of the economy to moderate growth and achieve the optimal exploitation of the labor market and achieve the goal of inflation at 2%, adding that the Federal Reserve coordinates with major central banks such as The Bank of Canada, the Bank of Japan, and the Bank of England, and that the major banks have agreed to cut rates and that they will work to provide liquidity from the dollar.

Powell also stated that monetary policy in the United States was noticeably tightening it and that he did not think it would be appropriate to resort to negative interest in the United States, adding that monetary stimulus is required by the American administration, with his statement that the American banking sector is strong and has a lot of head Money and liquidity, and that the Federal Open Market Committee will not meet on March 17-18, as previously planned, and that meeting will be sufficient for it.

We would like to point out that the US President Trump welcomed the decisions of the Federal Committee a little while ago and his remarkable description. Otherwise, he states that the US administration announced last weekend a national emergency in the United States, which will save more than $ 50 immediately in disaster relief funds. And, as the Republican President Trump's administration also came up with a new legislation package that will provide support to American families and societies in dealing with the Corona virus.

We would like to point out that the forty-fifth Trump President recently criticized the performance of Federal Reserve Governor Powell, explaining that he believed that the Federal Committee would be and should be more proactive, adding that the United States has the number one currency in the world by an expanded difference and that the federal currency is strong To a large extent, he expressed that the dollar is strong and that the Federal Reserve is not doing what it should do.

In the same context, Trump noted that the interest on federal funds should not be higher than the competing countries for America, with his mention that the interest in Germany is basically below zero, it is negative, and that there are many countries with interest as negative as Japan and other countries, while his country pays Interest is higher, adding that what he wants is to refinance America's debt and that it is possible and easy at a lower price, expressing we have tremendous opportunities now, because Jerome Powell does not make it easy.

Otherwise, the markets are looking to the US economy, the world's largest industrialized country, to disclose industrial sector data with the release of the New York Industrial Index reading, which may reflect the shrinkage of the expansion to 5.1 compared to 12.9 in February, and this comes in conjunction with the activities of the Group of Seven summit (Canada, Italy France, Germany, Japan, the United Kingdom and the United States) will be established via satellite and will discuss measures to deal with the economic impact of the outbreak of the Coronavirus.

On the other hand, we followed a little while ago the National Bureau of Statistics of China revealed the annual reading of the retail sales index, which showed a 20.5% decline compared to an increase of 8.0% in January, worse than the expectations that indicated a 4.0% decline, as the annual reading of industrial production showed a decline 13.5% against a rise of 6.9%, also worse than expectations for a decline of 3.0%, while the reading of unemployment rates showed an increase to 6.2% compared to 5.2% in January

Technical analysis

Gold ended the trading session last Friday with a strong negative to settle without supporting the main bullish channel that appears in the picture, which turns the intraday and short-term path downward, on its way to head towards 1453.10 as a next major negative target.

SMA 50 supports the downside expectations, noting that a break of 1508.86 is required to confirm the continuation of the expected bearish trend, while a breakout of 1571.20 represents a positive factor that will stop the expected bearish direction and lead the price to restore the main bullish path again.

The expected trading range for today is between 1520.00 support and 1570.00 resistance.

Expected trend for today: bearish.