Gold analysis 17.03.2020

Gold futures fell during the Asian session to witness their bounce for the seventh consecutive session from their highest since December 18, 2012, while losing sight of the US dollar index bouncing back from its third session since February 27, according to the inverse relationship between them with the growing fears of Corona Virus outbreak globally and on the cusp of developments and economic data expected today Tuesday by the US economy.

At exactly 03:45 am GMT, the gold futures contracts for April delivery fell 1.16% to trade at $ 1,495.40 per ounce compared to the opening at $ 1,512.80 per ounce, knowing that the contracts started the trading session on an upward price gap after yesterday's trading was concluded At $ 1,486.50 an ounce, while the US dollar index fell 0.08% to 98.06 compared to the opening at 98.14.

Investors are currently awaiting by the US economy the disclosure of retail sales reading, which represents about half of consumer spending, which represents more than two-thirds of the gross domestic product of the United States, which may reflect a slowdown in the pace of growth to 0.2% compared to 0.3% in the previous reading last January , And the core reading of the same indicator may also show a slowdown in the pace of growth to 0.1% compared to 0.3% in January.

This comes before we witness the disclosure of industrial sector data for the largest industrialized country in the world with the release of the industrial production index, which may reflect an increase of 0.4% compared to a decline of 0.3% in January, while the reading of the energy utilization index may show the acceleration and pace of growth to 77.1% Against 76.8% in January, and also before the release of the wholesale inventories reading, which may explain a decline of 0.1% compared to a rise of 0.1% in December.

Up to the disclosure of labor market data with the release of a job reading and job turnover reading that may reflect a decrease to 6.40 million compared to 6.42 million in December, in conjunction with the disclosure of housing market data with the release of the housing index reading by the National Association of Builders Houses that may reflect stability at $ 74 in February.

This comes hours after the Federal Reserve’s surprising meeting last Sunday, which is the second surprising meeting in less than two weeks, after the previous sudden meeting on the third of this month in which the Federal Reserve’s monetary policy makers decided to return to the short-term benchmark interest rates. 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's monetary policy statement stated that the decision to reduce will be effective from Monday March 16, and that the Federal Open Market Committee will repurchase treasury bonds with at least $ 500 billion per month and mortgage-backed securities at $ 200 billion per month At least, these purchases should be made at the appropriate speed to support the smooth performance of the stock market, treasury and mortgage agency.

The statement also stated at the time to move forward with repo agreements to ensure that the supply of reserves remains ample and support the smooth performance of US dollar financing markets in the short term. This came before the press conference held by Federal Reserve Governor Jerome Powell and before we witnessed yesterday The New York Federal Reserve announced that it would offer $ 500 billion via repo operations to provide more liquidity in the financial system.

Technical analysis

Gold price trading stabilizes near the level of 1509.00, and remains below it, to keep the negative pressure in place for the coming period, as this level is the first protection factor for the continuation of the negative scenario suggested in our recent reports, pending the resumption of the decline to attack the 1453.10 level and opening the way for heading towards our extended negative targets that start It is 1400.00 and goes away to 1307.10.

SMA 50 supports the suggested descending wave, taking into consideration that breaching 1509.00 then 1557.00 levels will stop the expected decline and lead the price to return to the main bullish path again.

The expected trading range for today is between 1450.00 support and 1540.00 resistance.

Expected trend for today: bearish.