Gold analysis 08.10.2020

Futures contracts for gold prices fluctuated in a narrow range that tends to decline, to witness its rebound to the second session in three sessions from its highest since September 21, overlooking the bounce of the US dollar index for the seventh session in ten sessions from its high since July 24 according to the inverse relationship Between them on the cusp of developments and expected economic data today, Thursday, by the US economy, and amid renewed optimism about the opportunities for US lawmakers to reach an agreement on additional stimulus to support the largest economy in the world in the face of the repercussions of the Corona pandemic.

At exactly 04:02 a.m. GMT, gold futures contracts for December delivery fell 0.12% to trade at $ 1,888.30 an ounce, compared to the opening at $ 1,890.60 an ounce, knowing that the contracts started the session on a downward price gap after it was concluded Yesterday's trading was at $ 1,890.80 an ounce, while the US dollar index declined 0.03% to 93.58 compared to the opening at 93.62.

Investors are currently waiting for the US economy to see the release of the aid claims index reading for last week on the third of this month, which may reflect a decline of 17,000 requests to 820,000 requests compared to 835,000 requests in the previous weekly reading, and the reading of the continuing aid requests for last week may also appear. As of September 26, a decrease of 367 thousand applications reached 11.4 million, compared to 11,767 thousand applications.

This comes hours after the Federal Reserve unveiled the minutes of the Federal Open Market Committee meeting held on September 15-16, in which monetary policymakers at the Federal Reserve Bank at the time kept short-term reference interest rates at zero levels between zero and 0. 25% for the fourth consecutive meeting.

The minutes of the Federal Reserve meeting stated that the majority of members noticed the recovery of US economic activity at a faster rate than expected during the past few months compared to the second quarter, and it is noteworthy that the Federal Reserve had previously adopted several stimulus programs until the economy showed signs of recovery, on top of which is the 80 Treasury bond purchase program. $ 1 billion per month and mortgage bonds at least $ 40 per month.

The minutes also included the members of the Federal Reserve’s expectations of growth rates, inflation and unemployment, in addition to the future interest rates for the next three years that were revealed last month after the end of the meeting following the press conference held by Federal Reserve Governor Jerome Powell at the time in which he expressed his expectations of survival. The leader is at zero levels until late 2023.

It is noteworthy that Fed Governor Powell, who called last Tuesday for the continuation of strong financial and monetary stimulus for the sake of the economic recovery, who declared that "there is a long way to go", stressed in his press conference last month to comment on the decisions and directions of the Federal Committee at the time, the importance of The fiscal stimulus policy to support the economy, as it affirmed the Fed’s commitment to using all its tools to support the recovery.

Other than that, we followed yesterday US President Donald Trump expressed that he will agree to extend a separate small stimulus package of about $ 25 billion and that he provides the necessary support to airlines, and this came hours after his tweet last Tuesday on Twitter, "He instructed my representatives to stop negotiating until what After the election when, as soon as I win, we're going to pass a major stimulus bill focusing on hardworking Americans and small businesses. "

Technical analysis

The price of gold has shown sideways trading since yesterday, settling below the SMA 50, which constitutes continuous negative pressure in front of the price, which supports the continuation of our expectations for the downside move for the upcoming period, targeting 1860.80 as the next major station.

Therefore, we expect to witness negative trading today, supported by the gradual loss of positive momentum by Stochastic, bearing in mind that breaching 1901.80 then 1915.00 will stop the suggested decline and push the price to turn higher.

The expected trading range for today is between 1860.00 support and 1900.00 resistance.

The expected general trend for today: Bearish.