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Gold analysis 22.05.2020

Gold prices fluctuated in a narrow range tilted to the upside during the Asian session to witness its bounce for the second session from the lowest since May 13, while tolerating the dollar index rebound to the third session from the lowest since the fourth of this month, when it tested the lowest since 30 of March / He practiced according to the inverse relationship between them after the developments and economic data that he followed on Friday from the Japanese economy, which included the decisions and directions of monetary policymakers at the Bank of Japan and in the wake of concerns about the return of strikes in Hong Kong and the escalation of tensions between Washington and Beijing.


At exactly 04:27 AM GMT, gold price futures for June delivery rose 0.09% to trade at $ 1,727.50 per ounce compared to the opening at $ 1,726.00 per ounce, knowing that the contracts started the trading session on an upward price gap after it concluded yesterday's trading At $ 1,721.90 per ounce, while the US dollar index rose 0.08% to 99.51 compared to the opening at 99.42.


On the Japanese economy, we followed the disclosure of inflation data with the release of the annual reading of the national consumer price index, which showed a slowdown in growth to 0.1% compared to 0.4% in March, while the annual reading of the same index excluding fresh food showed a contraction of 0.2% against a growth of 0.4%, Worse than expectations for a contraction of 0.1%, and the annual reading excluding energy and fresh food showed growth slowed to 0.2% versus 0.6%.


This came before we witnessed the decision of the monetary policymakers at the Bank of Japan at the May 22 emergency meeting, which was held for one day as a precautionary measure against the spread of the Coronavirus, to keep interest rates negative at 0.10%, which came in line with expectations, and that remains Also on the pledge to direct the 10-year government bond yield at zero, otherwise, Bank of Japan Governor Haruhiko Kuroda stated that the bank had not held a press conference.


In the same context, the Central Bank of Japan unveiled the monetary policy statement, which reflected the Bank of Japan's provision of further stimulus with the launch of a new lending program aimed at channeling more money to small and medium-sized companies suffering from the economic blow to the outbreak of the coronavirus, while stating that it has extended The deadline for a series of recent actions he has taken to combat the consequences of the Coronavirus.


The Bank of Japan also announced the acceleration of the debt purchases of companies with a six-month period until the end of the current fiscal year on March 31, 2021, with a statement that the response measures for the coronavirus have reached to date 75 trillion yen, and this comes in the wake of the Bank of Japan raising in Last April's meeting, the maximum purchase limit for corporate and commercial securities that it pledges to purchase is 20 trillion yen from 7 trillion yen previously.


It is reported that the Japanese Central Bank also confirmed last month its commitment to purchase unlimited amounts of government bonds by canceling the previous directive to purchase them at an annual rate of about 80 trillion yen, as the monetary policy statement included at that time a paragraph, "The Bank of Japan will purchase the necessary amounts of government bonds without Set a higher limit so that the yield of 10-year bonds remains at around zero percent.


On the other hand, we followed the announcement of the National People's Congress (Parliament) in its annual session on a new national security law for Hong Kong, which comes after months of anti-government protests in the region, as part of Beijing's efforts to impose its control on the city, which may result in it. Renewed pro-democracy protests in the former British colony, which periodically turned violent.


This new Hong Kong city security bill provides for prohibiting separation laws, foreign interference, terrorism, and all provocative activities aimed at overthrowing the central government and any external interference. In another context, China also announced that it will not set a target for GDP for 2020, coinciding with an escalation Tensions between Washington and Beijing after the Senate passed a bill barring Chinese companies from listing on US exchanges.


Technical analysis


Gold price continued its negative pressure yesterday to break the level of 1725.90, and it moves below SMA 50 to fall under more potential negative pressure, but in return, we notice that the price closed the daily candle above the mentioned level, and gets positive signals through the stochastic indicator.


Therefore, this inconsistency between technical factors makes us prefer stopping on neutrality until we get a clearer signal for the next direction, noting that confirming the break of support 1725.90 will put the price under downward corrective pressure targeting the level of 1691.10 as a first station, while a break of 1743.00 will return the price to the main channel The bullish trend is pushing towards achieving positive targets that start by surpassing the level of 1764.00 to open the path towards heading towards 1810.00.


The expected trading range for today is between 1710.00 support and 1750.00 resistance.


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

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