Gold Analysis 01-07-2020

Gold price futures fluctuated in a narrow range tilted to the upside during the Asian session near its highest in nine years, disregarding the rise 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, which includes detection The minutes of the Federal Open Market Committee meeting.

At exactly 04:51 AM GMT, gold futures contracts for next August delivery rose 0.13% to trade at $ 1,801.20 per ounce compared to the opening at $ 1,798.90 per ounce, knowing that the contracts started the trading session on a falling price gap after it concluded trading Yesterday at $ 1,800.50 an ounce, while the US dollar index rose 0.02% to 97.41 compared to the opening at 97.39.

Investors are currently awaiting by the American economy to disclose preliminary data for the labor market with the release of the index of change in private sector jobs, which may reflect about 2,850 thousand added jobs compared to the loss of 2,760 thousand jobs in May, and that comes hours before the disclosure after Friday On the monthly report of jobs except agricultural and unemployment rates in addition to the hourly rate for the month of June.

This comes before we witness the disclosure of the final reading of the manufacturing PMI by Markit for the United States, which may reflect the stability of the contraction at a value of 49.6, little changed from the initial reading for the past month and against a contraction at 39.8 in May, before we witness the release of The construction spending index, which shows a 1.0% increase compared to a 2.9% decline in last April.

Up to the disclosure by the largest industrial country in the world of the reading of the Institute of Industrial Supply index, which may show contraction shrinkage to 49.5 compared to 43.1 in May, as the reading of the Institute of Industrial Supply measured in prices may indicate shrinkage of deflation to 43.8 compared to 40.8 , And we would like to point out, because the reading reading at a value of 50 or higher reflects an amplitude, while its reading under 50 indicates a contraction.

This comes before the Federal Reserve revealed the minutes of the Federal Open Market Committee meeting that took place on 9-10 June, through which it decided to fix interest on federal funds at zero levels between zero and 0.25%, which came in line with expectations at the time. And, with the disclosure also at the time of the expectations of the members of the Committee of the rates of growth, inflation and unemployment in addition to the future interest rates for the next three years.

We would like to point out, because the expectations of the members of the Federal Committee included at that time that short-term benchmark interest rates will remain at their zero levels until 2022 and that the American economy may shrink 6.5% during 2020 and that unemployment rates may reach 9.3% by the end of this year 2020, before It declined to 6.5% in 2021 and to 5.5% in 2022.

It is noteworthy that the Federal Reserve Governor Jerome Powell stressed in the press conference held after the meeting the commitment of the Federal Reserve to use all tools to support the American economy in light of the current challenges to achieve the goal of inflation and price stability and access to optimal exploitation of the labor market, explaining that the Corona virus caused health damage And expanded economics in America and abroad.

Powell noted at the time that the coronavirus and the measures that were adopted to limit its spread and specifically the closure of economies, had a negative impact on economic activity and led to high unemployment, with his discussion that weak domestic demand and lower oil prices have a negative impact on inflation, adding that the continuation of the current crisis will harm the activity More economic and employment in addition to inflation in the short term and will reflect negatively on the economic outlook for the medium term.

Powell also reported at the time that he "does not even think about thinking about raising interest rates", as he touched on the fact that the financial conditions have improved to reflect the positive actions taken to support the American economy, and it is reported that the Federal Committee recently adopted many stimulus programs until the economy showed signs of recovery On top of it is the Treasury bond purchase program, at $ 80 billion per month, and mortgage bonds, at least $ 40 per month.

In another context, yesterday we followed the testimony of the Federal Reserve Governor Powell and the US Treasury Secretary Stephen Manuchin before the House Financial Services Committee, through which Powell stated that controlling the Corona virus is vital to the recovery of his country's economy and that a new stimulus is being adopted during July. He added that the Federal Committee intends to provide more information about the lending program and extend it by the end of this week.

And that with Powell touching on Tuesday that the Federal Reserve has concerns about China's commitment to the partial trade agreement that Washington reached with Beijing early this year, while expressing that it might abide by it, stating that the United States lost its confidence in China due to the lack of transparency about the Corona virus, and came This is with the confirmation of Minister of the Treasury Manoucheen also before Congress to work on expanding the stimulus during July.

It is noteworthy that Federal Reserve Secretary Powell stressed last Monday that the expectations about the American economy are "unconventionally uncertain", expressing that the adoption of more monetary stimulus may be necessary, and this came in the wake of Powell reported last week during his testimony also before the Congress that there is a case of Uncertainty about the timing and strength of the potential economic recovery and that the current downturn may lead to widening inequality within his country if the matter is not contained.

Technical analysis

Gold price resumed its positive trading to approach our first awaited target at 1795.00, and it is moving inside the bullish channels that appear in the picture, which supports chances of continuing the rise to head towards 1850.00 areas as the next main station.

Thus, the bullish trend scenario will remain valid and active for the upcoming period, supported by the EMA50, noting that the continuation of the bullish wave requires stability above 1762.00 and the most important above 1741.50.

The expected trading range for today is between 1770.00 support and 1810.00 resistance

Expected trend for today: bullish