The gold came under pressure in the beginning hours of the week to be traded below $1220 again, as the risk apatite could return to the markets making Shanghai composite loss after long vacation nearly 50 points only sending Nikkei 225 up more than 800 points, Despite the preliminary release of Q4 GDP of Japan which has shown quarterly contraction by 0.4% and yearly contraction by 1.4%.
The investors could find reason to reload risky assets by oil benchmarks rebound by the end of last week but the fear of forming lower highs is still existing with looming economic downside risks.
After overextended wave of selling dragged WTI down to $26.10, it could bounce up to be traded near $29.30 by the end of last week driving Dow Jones industrial average to gain back more than 300 points before long holiday.
William Dudley who is the Fed’s governor of New York has tried during the last session of last week to lower the worries about the US economy saying that it is now more resilient to any shocks, after the Fed's Chief Yellen had indicated in her testimonies before the congress financial committee and the senate banking committee that there are many dovish economic developments have happened, after the Fed raised its funds rate for the first time since 2006 by 0.25% on last Dec. 16 but she has not yet ruled out raising the interest rate again this year.
anyway the dovish interest rate outlook in US became well-materialized in both secondary and prime money markets in US.
While the gold is still able to get use of this outlook to gain back higher places, as the economic exacerbation came campaigned with lower interest rate outlook in US dampening the demand for the greenback.
While the inflation outlook is still sized by lower global economic expansion and lower oil prices making the Fed in no need to be in rush to raise the interest rate for containing inflation upside risks, while the US economy is looking in need to its accommodative stance at this level, after GDP annualized deceleration in the recent 3 quarters and manufacturing contraction in the recent 3 months.
Technically, CL Mar. 16 has become more bearish by having lower low at $26.05 below its previous low of last Jan. 20 at $27.55 containing its rebound from it to $34.81.
As last rebound could improve its look over the short term as it can expose it to another impulsive wave to the down side.
CL Mar. 16 is still well below its Daily SMA20 and it is still also below its daily Parabolic SAR (step 0.02, maximum 0.2) for the ninth consecutive day reading today $32.53
But it could have the main line of its daily Stochastic Oscillator (5, 3, 3) which is sensitive to the volatility in the neutral region coming up from the oversold area below 20 reading now 45.135 and also its signal line which is reading 26.042.
Important levels: Daily SMA20 @ $30.36, Daily SMA50 @ $33.59, Daily SMA100 @ $36.13 and Daily SMA200 @ $45.46.
S&R:
S1: $26.05
S2: $25.00
S3: $23.51
R1: $33.64
R2: $34.81
R3: $35.57
Have a good day
Kind Regards
Global Market Strategist
Walid Salah El Din
Mob: +20 12 2465 9143
E-Mail: mail@fx-recommends.com
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