Gold analysis 18.03.2020

Gold price futures fluctuated in a narrow range tilted to the upside during the Asian session to witness its bounce back for the third session from the lowest since November 26, with the US dollar index rebounding to the second session from the top since February 21 according to the inverse relationship between them with a growing Fears of the outbreak of the Corona virus globally and on the cusp of developments and economic data expected on Wednesday by the US economy.

At exactly 03:59 AM GMT, gold price futures for April delivery rose 0.38% to trade at $ 1,531.60 per ounce compared to the opening at $ 1,527.60 per ounce, knowing that the contracts started the trading session on an upward price gap after yesterday's trading was concluded At $ 1,525.80 an ounce, with the US dollar index down 0.12% to 99.28 compared to the opening at 99.40.

Investors are currently awaiting the release of the housing market data by the US economy, with the release of both the beginning construction index and the building permit index, and amid expectations that the construction permits reading will reflect a 3.2% decline to about 1,500,000 permits compared to a rise of 9.2% at 1,551 thousand permits in January. / January, as readings for beginning homes can reflect a decline of 4.3% to about 1,507 thousand homes, compared to a rise of 16.9% at 1,567 thousand homes.

This comes hours after the Federal Reserve announced that it will enter the commercial paper markets, which have been frozen in the midst of the economic turmoil, which threatens businesses that need financing between today and the other, and the Federal Open Market Committee stated that it will establish a financing facility for commercial papers to support the cash flow of homes and businesses and that it Form a special purpose vehicle for buying any securities of unsecured assets with $ 10 billion in support from the Treasury.

This came 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.

Technical analysis

Gold price trading stabilizes below the level of 1543.35, which turns into resistance after breaking it previously, and the moving average constitutes 50 continuous negative pressure against the price, while the stochastic indicator is losing its positive momentum significantly to reach overbought areas.

Consequently, these factors encourage us to continue to suggest the bearish trend for the next period, and targets start at 1509.00 and extend to 1453.10, taking into consideration that breaching 1571.20 will stop the expected decline and bring the price back to the main bullish channel again.

The expected trading range for today is between 1450.00 support and 1570.00 resistance.

Expected trend for today: bearish.