Gold analysis 20.05.2020

Gold prices fluctuated in a narrow range tilted to the upside during the Asian session amid the negative stability of the US dollar index according to the inverse relationship between them on the threshold of developments and economic data expected on Wednesday by the US economy, the largest economy in the world and with the pricing of markets for measures to reopen the US economy and some other global economies Gradually and the return of life to normal.

At exactly 04:34 AM GMT, gold price futures for June delivery rose 0.29% to trade at $ 1,754.20 per ounce compared to the opening at $ 1,749.20 per ounce, knowing that the contracts started the session’s trading on an upward price gap after yesterday’s trading was concluded At $ 1,745.60 an ounce, with the US dollar index down 0.10% to 99.46 compared to the opening at 99.56.

Markets are currently awaited by the US economy, as the Federal Reserve revealed the minutes of the Federal Open Market Committee meeting held on April 28-29, in which it was decided to stabilize interest on federal funds at zero levels between 0.25 and 0.25%, which It came in line with expectations at the time, amid stressing the way forward in using all tools to support the American economy in these difficult times.

It is reported that members of the Federal Committee expressed at the end of last month that the outbreak of the Coronavirus had caused human and economic suffering within the United States and abroad 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 reduce inflationary pressures while benefiting That this health crisis will broadly affect economic activity and the labor market as well as inflation.

The members of the Federal Committee also mentioned at the time that interest rates are expected to remain at zero levels to support the flow of credit to families and companies and that the Federal Reserve is moving forward in purchasing treasury bonds at $ 500 billion per month and mortgage bonds at least $ 200 per month when the economy showed signs of recovery in the wake of overcoming the current crisis and achieving price stability in addition to an improvement in the labor market.

The Federal Committee also stated at the time that it would continue to follow economic data and data related to health care and global developments and assess the current and expected conditions within its work to reach the goal of inflation at two percent and achieve the maximum benefit in the labor market, adding that it will monitor the market conditions closely and is ready to amend its tools if What is needed.

Otherwise, yesterday we followed the statement of Federal Reserve Governor Jerome Powell and US Treasury Secretary Stephen Manuchin before the Senate Satellite Banking, Housing and Urban Affairs Committee, and Powell emphasized that the Federal Reserve will keep interest rates at zero levels until recovery Economy and achieving the goal of inflation, and he is committed to using all his tools to support the economy in this difficult period.

In the same context, he mentioned in his testimony before the Congress about the relief aid that was approved by the Federal Reserve and the US Treasury to reduce the repercussions of the outbreak of the Coronavirus and the economic security law, because the country's economy is facing expanded and perhaps unprecedented challenges for Americans due to the outbreak of the Coronavirus, with He said he expected the US economy to improve during the second half of this year.

It is noteworthy that Federal Reserve Governor Powell warned last Sunday in the program "60 minutes" on the "CBS" channel that the economic downturn may continue until late 2021, explaining that the economic downturn in his country may reach between 20% and 30% "easily" During the current quarterly quarter, with the outbreak of the Coronavirus, he explained that he expected the economy to "recover steadily during the second half of this year," as long as America avoided "the second wave of the virus."

Powell then noted that "it is very important to avoid this. It will be devastating to the economy and public confidence," adding that "assuming there is no second wave of the virus, I think you will see the economy recover steadily during the second half," explaining that "in order for the economy to fully recover". A vaccine must wait, "Powell also called on US lawmakers to pass more economic incentives and relief aid, while telling him that unemployment rates could peak at 25%.

Powell, who is expected to deliver tomorrow, Thursday, the opening remarks about the Coronavirus at a federalist's event listening via satellite, also said that the Federal Reserve adopted many incentive measures and still has more tools, explaining that there is a lot that can be done to support the economy, and adding He is committed to doing everything in his power as long as necessary to do so, while excluding the resort to push interest rates to the negative range.

Technical analysis

Gold provided positive trading yesterday to settle around 1745.00, reinforcing expectations for the continuation of the main bullish trend, which is being organized within the bullish channel that appears on the above chart, while SMA 50 continues to support the price from below.

Thus, we believe that the field is open to continue rising during the upcoming sessions, which mainly targets the areas of 1805.00, noting that breaking 1726.00 and holding below it will put the price under downward corrective pressure before returning to resume the main bullish trend.

The expected trading range for today is between 1730.00 support and 1775.00 resistance.

Expected trend for today: bullish.