Gold analysis 31.01.2020

Gold price futures fluctuated in a narrow range that tilted toward a decline during the Asian session amid the rise of the US dollar index according to the inverse relationship between them after the developments and economic data that were reported by the Chinese economy as the largest consumer of metals globally and on the cusp of developments and economic data expected on Friday by the American economy the largest economy In the world and in the midst of the aspiration for Britain to officially exit the European Union today.

At exactly 04:21 AM GMT, gold price futures for April delivery decreased 0.13% to trade at $ 1,576.30 per ounce compared to the opening at $ 1,576.30 per ounce, knowing that the contracts started the session’s trading on a falling price gap after it concluded yesterday's trading At $ 1,589.20 an ounce, with the US dollar index rising 0.06% to 97.92 compared to the opening at 97.86.

We have just followed the CFLP unveiled the Industrial Purchasing Managers' Index (PMI) reading, which showed a shrinkage in value to 50.0 compared to 50.2 last December, worse than expectations that indicated a shrinkage in breadth to 50.1, while an indicator reading showed Service Purchasing Managers widened to 54.1 from 53.5 in December, contrary to expectations that expansion to 53.1.

This came in conjunction with the continuation of the Lunar New Year holiday in China, which was extended by three days to the second of February next, amid efforts to limit the spread of the Corona virus, which stimulated in one way or another the risk appetite of investors and heavier followers on gold prices as a haven It is safe, especially that the Chinese data did not reflect the industrial sector's significant impact from the coronavirus, as well as the expansion of the service sector.

It is reported that the World Health Organization announced yesterday an international health emergency due to the rapid outbreak of the Corona virus, which requires more efforts to contain and combat that virus that started in Wuhan, China, which has killed more than 204 people in China so far, in addition to about ten Thousands of people infected in successive shadows Many countries have reported cases of HIV infection.

On the other hand, investors are currently awaiting by the US economy to disclose spending and personal income data, which may reflect a slowdown in personal spending growth to 0.3% versus 0.4% last November, and a slowdown in personal income growth to 0.3% compared to 0.5% in August November, while a reading of the core personal consumption expenditures index may show the stability of the pace of growth in December at 0.1%.

This comes in conjunction with the disclosure of the unit labor cost index reading, which may reflect the stability of growth at 0.7%, little changed from what it was in the third quarter, and before we witness the disclosure of industrial bottom data for the largest industrial country in the world with the release of the Chicago PMI reading Which may reflect the stability of the contraction at 48.9, little changed from last December.

To reveal the final reading of the University of Michigan's index of consumer confidence, which may show the stability of the expansion at 99.1 unchanged from the initial reading of the previous month this month and against 99.3 in December, and this comes hours after the Federal Open Market Committee meeting, which approved the monetary policy makers The Federal Reserve has cut interest rates for the third consecutive meeting by 25 basis points, between 1.50% and 1.75%.

It is noteworthy that the Federal Reserve Governor Jerome Powell stated last Wednesday during the press conference held after the meeting of the Federal Committee, that the decisions of the committee depend on the economic data received, while touching that in the event of continued inflation rates below the goal of the Federal Reserve, this may lead to this. To reduce inflation expectations and thus reduce interest, adding that inflation is expected to reach the target within the next three months.

Technical analysis

The gold price faced a noticeable negative pressure yesterday evening to break the level of 1575.90 and settle below it, which provides signals on the price trend to return to the downward corrective track, especially since there are features of a double top pattern on the intraday timeframes.

On the other hand, SMA 50 provides positive support for the price, along with the stochastic indicator reaching oversold areas, which supports the chances of the continuation of the movement within the bullish channel that appears in the picture.

Consequently, this conflict between technical factors makes us prefer stopping on neutrality until we get a clearer signal for the next direction, while noting that a break of 1575.90 and holding above it again will lead the price to resume the main bullish trend whose next target is located at 1611.20, while breaking 1563.35 will complete the formation The mentioned negative pattern and presses the price to achieve negative targets that start at 1554.10 and extend to 1536.50.

The expected trading range for today is between 1555.00 support and 1590.00 resistance.

Expected trend for today: It depends on the levels mentioned in the report.