GOLD analysis

05.03.2021

Technical reviews

Futures contracts for gold prices fluctuated in a narrow range that tends to decline during the Asian session, to witness the lowest since the eighth of June 2020, overlooking the rebound of the US dollar index from its highest since the beginning of December 2020 according to the inverse relationship between them on the cusp of economic developments and data today Friday by the US economy the largest in the world.

 

At exactly 05:01 a.m. GMT, gold futures contracts for next April delivery decreased 0.21% to trade at $ 1,707.80 per ounce, compared to the opening at $ 1,695.30 per ounce, knowing that the contracts started the session on a downward price gap after yesterday's trading was concluded At $ 1,700.70 per ounce, while the US dollar index fell 0.02% to 91.63 compared to an opening at 91.65.

 

Investors are currently awaiting the US economy to disclose labor market data with the release of the employment change index reading for sectors other than agricultural, which may reflect 197,000 added jobs compared to 49,000 jobs added last January, while the average income index reading in At the time, growth is stable at 0.2%, and the unemployment rate reading may show stability at 6.3% in February.

 

This comes in conjunction with the release of the merchandise trade balance reading, which may explain the widening of the deficit to a value of $ 67.5 billion compared to $ 66.6 billion in December, and before we witness the disclosure of the consumer credit index reading, which may reflect an increase to $ 11.8 billion. For $ 9.7 billion in December, otherwise, we followed yesterday excluding Fed Governor Jerome Powell from achieving a full employment target in 2021.

 

Yesterday, Fed Governor Powell, in an online event hosted by the Wall Street Journal, expressed that he was "concerned" about market turmoil, but he did not provide steps to curb the increased volatility caused by high Treasury yields, which are near the top. It has a year at 1.5% and weighs, in turn, on the performance of gold futures contracts, because the yellow metal, which is a safe alternative to investment, does not give returns.

 

It is noteworthy that the markets have recently witnessed a growing investor expectation of rising inflationary pressures in the future, especially after the recent rise in oil prices to their highest in more than a year, and we followed up earlier this week, the Deputy Governor of the Federal Reserve and a member of the Federal Open Market Committee, Lyle Brainard, of The fact that the volatility of the bond market may delay any decline in asset purchases by the Federal Reserve.

 

We would like to point out, because Brainard's statements at the time strengthened the expectations of some market analysts that the Fed might resort to controlling the yield curve on bonds and curb the rise in the yield on bonds by increasing its purchases of government bonds, which could, in turn, enhance the performance of gold prices, especially in The case of igniting inflationary pressures and the rate of inflation exceeds bond yields, making the actual return on bonds negative.

 

In another context, we have followed the approval of the Senate to vote on the bill of the sixth stimulus package to counter the negative repercussions of the Corona pandemic, worth $ 1.9 trillion, which US President Joe Biden adopts and previously launched the "American rescue plan", that bill that was passed last Friday in the House Representatives and is expected to pass by the Senate to boost the pace of the economic recovery of the largest economy in the world.

 

Technical analysis

 

Gold price succeeded in achieving our awaited target at 1692.00 and is trying to break it, which enhances the chances of extending the bearish wave in the short and medium term, organizing within the descending channel that appears in the picture, noting that breaking the aforementioned level will push the price to 1655.00 as a next main target.

 

Therefore, we will continue to suggest the bearish trend for the upcoming period unless breaching 1712.00 level and holding above it.

 

The expected trading range for today is between 1670.00 support and 1705.00 resistance

 

The expected general trend for today: Bearish

Author: GC
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