Gold analysis 28.04.2020

Gold price futures fell during the Asian session to witness its rebound to the fourth session from the top since April 16, amid the rise of the US dollar index according to the inverse relationship between them on the threshold of developments and economic data expected today by the American economy, which includes the launch of the activities of the Federal Market Committee meeting Open markets in Washington and in the shadow of market pricing to ease restrictions and the end of the global closure, with many countries announcing plans to ease restrictions.

At exactly 04:24 AM GMT, gold price futures for June delivery decreased 0.80% to trade at $ 1,710.70 per ounce compared to the opening at $ 1,724.40 per ounce, knowing that the contracts started the trading session on an upward price gap after it concluded yesterday's trading At $ 1,723.80 an ounce, with the US dollar index rising 0.08% to 100.16 compared to the opening at 100.08.

Investors are currently awaiting by the American economy the release of the merchandise trade balance index, which may explain the deficit shrinkage to $ 55.0 billion, compared to $ 59.9 billion last February, in conjunction with the disclosure of the initial reading of the wholesale inventory index, which may reflect the shrinking decline To 0.4% compared to 0.7% in February.

This comes before the annual reading of the house price index, which may show stable growth at 3.1% during February, and the disclosure by the largest industrialized country in the world of industrial sector data with the release of the Richmond Industrial Index, which may reflect a contraction of 41 versus a widening of 2 in March. Last March, in conjunction with the release of the consumer confidence index, which may show a shrinkage of expansion to 88.3 compared to 120.0 in March.

In another context, investors are awaiting later in the day for the launch of the FOMC meeting, April 28-29, in which it is expected that the benchmark interest rates will remain at zero levels between 0.25% and before we witness After tomorrow, Wednesday, the press conference holders will be held by Federal Reserve Governor Jerome Powell, half an hour after the meeting ends.

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.

In the same context, the Federal Open Market Committee announced in the middle of last month that it will carry out repurchases of treasury bonds of at least $ 500 billion per month and mortgage-backed securities of at least $ 200 billion per month, provided that these purchases are made at the appropriate speed to support The smooth performance of the stock market, treasury and mortgage agency.

In another context, the markets are also looking to tomorrow, Wednesday, to reveal the initial reading of the GDP of the United States for the first quarter, which may show the contraction of the largest economy in the world 3.9% compared to the growth of 2.1% in the fourth quarter, while the initial reading may reflect the GDP measured by prices For the last quarter, the pace of growth slowed to 1.0%, compared to 1.3% in the fourth quarter.

Otherwise, the markets look to the European Central Bank meeting tomorrow, Thursday, through which monetary policymakers are expected to keep interest rates at their current zero levels and stabilize the marginal lending rate at 0.25% in addition to keeping the deposit interest rate negative -0.50%, The size of the Emergency Bond Purchase Package (PEPP) is expected to increase by 500 billion euros to 1.25 trillion euros.

Technical analysis

Gold price based on SMA 50 and trying to start an ascending wave now, noting that the stochastic starts to cross positively, which constitutes a positive incentive that we are waiting to contribute to pushing the price to resume the expected bullish direction for the next period, whose targets begin at 1747.43 and extend to 1678.45 after penetrating the level the previous.

Thus, we will maintain our expectations for the bullish trend over the intraday basis, taking note that a break of 1705.00 will pressure the price to test the most important support for the short term trading at 1678.45 before any new attempt to rise.

The expected trading range for today is between 1700.00 support and 1745.00 resistance.

Expected trend for today: bullish.