Vang SJC

Ending the session yesterday (18/1), the gold price almost had sideways at $1,088.84/oz compared with the opening at $1,089.01/oz due to the equal buying and selling.

FUNDAMENTAL ANALYSIS

Fundamental Analysis

The buying state neutralising with the selling one carries on during today’s session, while the two opposite sentiments exist in parallel. In the European session, the market was busy tracking economic indicators, notably Zew Economic Sentiment and the Great Britain CPI, thus, the gold liquidity becomes less active. The US market session is to come, the trend of the precious metal price will get clearer when the market is informed of the housing market index.

The index got no help to paint for the economy outlook as it is predicted to be unchanged from the previous period, which supports gold and makes them become more brilliant.

The NAHB Housing Market Index published by the National Association of Home Builders (NAHB) monthly, shows the survey of about 900 home builders to measure sentiment for the US single-famlily home sales. The index forecast for mid-January is 61 points – the lowest since August 2015, the same as the previous month, but less than the previous forecast. If the index reaches above 50, the survey indicates a favorable outlook on home sales. The home sales are supported by the consumer spending which plays a key role in the US economy. The constant move in these reports refers to modest expenditure from consumers.

At the beginning of Asia session, the equities were pressured by the data showing that China’s economy grew at its slowest clip since 2009 in the fourth quarter, pushing investors towards safe-haven assets.

The world’s Number two economy grew 6.8 percent in the fourth quarter. For all of 2015, growth came in at 6.9 percent, the weakest in 25 years. Besides, the industrial production and retail sales of this country fell short of the expectation, as the former was 5.9% and the latter was 11.1%. All sectors slowed at the end of the year as local consumption weakened and the economy transitted from the investment towards the consumer-led growth, which raises the mounting concerns amid the slowdown in China.

In the physical gold market, the demand for gold is bullish for the price. India trade deficit reaches 4-month high resulting from the increase in gold import. The gold shipment has jumped to $3.8 billion this month due to the wedding and festive demand.

Inflation remains low when the oil prices are stuck in the oversupply, according to the IEA. This will be an obstacle to the Fed hike rate and a benefit to the precious metals.

TECHNICAL ANALYSIS

Technical Analysis

Currently, at 15:49, GMT+7, the bullion is traded at $1,092.18/oz, adding 0.36% compared with the opening price at $1,088.75/oz. The index is forming a green candle with the upwward shadow.

The price range lies between 50.0 bar at $1,092/oz and 61.8 bar at $1,087/oz, while the 50.0 has served as the strong resistance in 6 days till now, as the Fibbonacci shows. Yesterday, the XAU/USD index was also within the same range. At the early Asian trading, MUAEA Signal Trend has shown a “Sell signal” giving us the rewards of approximately 316 points.

Observing the RSI (14) Index which is known as the oscillator line, is at 61.62, above 50 threshhold, and on track to go upwards , signaling the bullish expectation. The H1 chart shows that the selling pressure on the market prevents the price from going up around $1,092/oz.

ADX is the average for the whole uptrend and downtrend, it means that when prices rise or fall according to one obvious way (as one trend – trend increasing or decreasing), ADX exceed 30 said the trend is in the development stage. According to ADX (14),  the index shows 21.6216, and +DI (the green line) cuts and tends to exceed the -DX, giving out a rise in prices. The figure 21.6 states that the upward trend is not strong enough.

SENTIMENTAL ANALYSIS

Sentimental Analysis

There are 6 red candles with three of them long and 5 green candles with two a bit longer than the red ones. The candles shadow shows that the volume traded remains stable, investors are quite certain about their actions. The price move are in a narrow Bollinger Band, so the flexibility of the price is relatively low, price will change at a average pace.

The tension between the sell and buy pressure comes from the divergency in the investors’ sentiment. The positive side comes from the soft data for the US economy recently and the contraction in the manufacturing sectors in China, which push to buy gold as safe – haven assets. The contrary one derives from the shortcoming FOMC meeting in late January and the extremely low oil price.

Investors are also hesitating whether to buy or sell. Any unexpected move in the gold market will concern all of the rest. Market also pay attention to other assets such as dollar and bonds to diversify their portfolio.

RISK

Risks

Weak physical demand from top gold consumers such as China and India has limited gold’s upside potential, some analysts say, with Chinese consumer spending dented by its slowing economy.

China can get more stimulus that support the being condition, then cap the global fears. Asian shares were mostly higher on Tuesday (19/1) as Shanghai stocks surged after data pointing to slower Chinese economic growth raising stimulus hopes. The stock market are gradually recovering, which “put the gold in the warehouse” with no use.

International Energy Agency (IEA)said in its monthly report today that unseasonably warm weather and rising supply will keep the crude oil market oversupplied until at least late 2016. With the world economy slowing, the IEA said it had cut its forecast for 2016 OPEC crude oil demand by 300,000 barrels/day to 31.7 million barrels/day. The low oil prices can pull the precious metal down when the purpose for oil-led inflation is driven back.

Market commentary

Today, the gold price tends to increase in the range of $1,094/oz if the housing market index being flat.

However, as mentioned in the Risks, the gold price will be likely to fall down for the price of $1,081/oz if the market keeps focusing on the Eurozone and its policy this week.

Analyses of Group fiinvesting

Linh Nhan