Gold analysis 01.05.2020

Gold price futures fluctuated in a narrow range tilted toward a decline during the Asian session amid the rise of the US dollar index for the first time in six sessions, indicating its bounce to the second session from the lowest since March 30, according to the inverse relationship between them on the threshold of developments and economic data expected on Friday By the US economy and in the shadows of market pricing for the stimulus that aims to contain the negative repercussions of the outbreak of the Coronavirus and the general trend 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 0.07% to trade at $ 1,692.40 per ounce compared to the opening at $ 1,693.50 per ounce, knowing that the contracts started the session’s trading on a falling price gap after yesterday's trading was concluded At $ 1,694.20 an ounce, with the US dollar index rising 0.01% to 99.13 compared to the opening at 99.12.

The markets are looking to reveal the final reading of the manufacturing PMI by Markit for the United States, which may reflect the stability of the contraction at $ 36.9, little changed from the initial reading of last month and compared to deflation at 48.5 in March before we witnessed by the economy The US construction spending index released showing the decline widened to 3.5% versus 1.3% in February.

This comes in conjunction with the disclosure also by the largest industrialized country in the world about the reading of the Institute of Industrial Supply index, which may show the breadth of deflation to 36.7 compared to 49.1 in March, as the reading of the Institute of Industrial Supply measured in prices may show the extent of deflation to what it valued 30.7 vs. 37.4, and we would like to point out, because the reading at a value of 50 or higher reflects a widening, while it's reading less than 50 indicates a contraction.

Other than that, we followed yesterday the Federal Reserve announced a new stimulus program to provide financing to citizens directly, and this came after the Federal Open Market Committee decision in the April 28-29 meeting to keep interest rates at between zero and 0.25%, which It came in line with expectations, and the members of the committee stressed that they are going forward to use all the tools of the Federal Reserve to support the American economy in these difficult times.

In the same context, members of the Federal Open Market Committee discussed on Wednesday that the outbreak of the Coronavirus caused human and economic suffering inside and outside America and that the preventive measures adopted by countries globally weigh on economic activity and that the decline in demand and the collapse of oil prices reduces inflationary pressures while benefiting That this health crisis will broadly affect economic activity and the labor market in addition to inflation.

The members of the Federal Committee also touched at the time that the interest on federal funds is expected to remain at their zero levels to support the flow of credit to families and companies and that the Federal Reserve is going ahead with the purchase of treasury bonds at $ 500 billion per month and mortgage bonds at least $ 200 per month until the economy has shown signs of recovery following the current crisis and stabilizing prices, as well as an improvement in the labor market.

Technical analysis

The gold price decline stopped near the level of 1678.45, and we notice that the stochastic indicator is entering the oversold areas in the sale, so that the price begins to rebound upwards in a sign of the resumption of the main bullish trend, waiting for achieving our main positive targets that start at 1747.43 and extend to 1780.00 after breaking the previous level.

On the other hand, it should be noted that breaking 1678.45 will stop the expected rise and press the price to drop towards 1635.80 areas initially before any new attempt to rise.

The expected trading range for today is between 1675.00 support and 1730.00 resistance.

Expected trend for today: bullish.