Gold analysis 27.04.2020

Gold price futures fluctuated in a narrow range tilted back down during the Asian session, tolerating the US dollar index rebound for the second consecutive session from its highest since April 6, when it tested the highest since March 26, according to the inverse relationship in the aftermath The decisions and trends of the Bank of Japan and in the shadow of market pricing for the consequences of the outbreak of the Coronavirus and the stimulus aimed at containing these negative consequences.

At exactly 04:58 AM GMT, gold price futures for June delivery decreased 0.09% to trade at $ 1,743.50 per ounce compared to the opening at $ 1,745.00 per ounce, knowing that the contracts started the trading session on an upward price gap after the week's trades were concluded The past was at $ 1,735.60 an ounce, while the US dollar index fell 0.24% to 99.99 compared to the opening at 100.23.

A few minutes ago, we followed the monetary policy makers at the Japanese central bank at the April 27 meeting, which was shortened as a precaution against the spread of the Coronavirus, to stay on the short-term reference interest rates at 0.10%, which came in line with expectations. And with the disclosure of the Bank of Japan monetary policy statement, which reflected the Japanese central bank's further stimulus.

In the same context, the monetary policy statement clarified that the monetary policymakers of the Bank of Japan raise the maximum purchase of corporate bonds and commercial securities that it pledges to buy to 20 trillion yen from 7 trillion yen previously, as well as the Japanese central bank’s commitment to purchase unlimited quantities of Government bonds by canceling the previous purchase guidance at an annual pace of about 80 trillion yen.

The central bank’s monetary policy statement included a paragraph, “The Bank of Japan will purchase the necessary amounts of government bonds without setting an upper limit so that the return of 10-year bonds will remain at around zero percent,” and attention is now focused on the outcome of the press conference that will be held by the Governor of the Bank of Japan. Haruhiko Kuroda in Tokyo for more details on the Japanese central stimulus.

In another context, investors are also looking by the Japanese economy to disclose labor market data with the release of the unemployment rate reading, which may reflect an increase to 2.5% compared to 2.4% last February. It is reported that the Japanese Minister of Economy Yasuchi Nishimura noted last Friday that the stimulus package approved by the Japanese government, which is estimated at 1.1 trillion yen, it will boost the GDP of the third-largest economy in the world by 4.4%.

On the other hand, investors are looking forward to tomorrow, Tuesday, to the launch of the FOMC meeting, April 28-29, in which the short-term benchmark interest rates are expected to remain at zero levels between zero and 0.25% before we witness after Tomorrow, Wednesday, the press conference Fed Governor Jerome Powell's meetings will be held half an hour after the FOMC meeting in Washington expires.

We would like to point out, that the Federal Reserve monetary policymakers adopted at the previous Federal Open Market Committee meeting held on March 15th that surprising meeting, which was the second in less than two weeks after the previous sudden meeting on the third of the same month, to return interest on Federal funds to zero levels while reducing interest rates at the time by 100 basis points from between 1.00% and 1.25%.

It is noteworthy that the return of the members of the Federal Open Market Committee to the interest of the federal funds to the zero levels that remained since 2008 until the meeting of 27-28 October 2015, and came after reducing them in the previous emergency meeting by 50 basis points from between 1.50% and 1.75 %, And after the committee members cut interest three times by 25 basis points in previous meetings last year 2019.

Technical analysis

The gold price continues to fluctuate around 1725.00, and gets continuous positive support from the EMA50, waiting for the resumption of the upside move whose targets begin to breach the 1747.43 level to open the way towards heading towards 1780.00.

In general, the positive scenario will remain likely unless 1678.45 level is broken and stability below it, as breaking this level will put the price under the downward corrective pressure whose next target is located at 1635.80 before any new positive attempt.

The expected trading range for today is between 1700.00 support and 1750.00 resistance.

Expected trend for today: bullish.