Vang SJC

Yesterday, gold price climbed up to $1,108.73/oz, the highest in two weeks. The price closed at $1,107.71/oz, up nearly 1% from the open price $1,097/oz.

FUNDAMENTAL ANALYSIS

Fundamental Analysis

The gold has jumped to the 2-week high in the context of the upcoming Federal Open Market Committee policy meeting late January. The US central bank is widely expected to leave its federal fund rate unchanged at 0.25-0.5%. Furthermore, traders are not pricing in the probability of the next increase until September, as there are below 30% traders betting on the March meeting and approximately 50% odds on the rate hike in June. The “extremely gradual” tightening policy of Federal Reserve has its root from the fading inflation outlook and the shrinking in the manuafacturing and services sectors of the economy.

The oil price declines in January is supposed to block inflation from rising back to the Fed’s target of 2%, which has been beneath since 2012. Sales at the US retailers declined in December, the US manuafacturing contracted last month at the fastest pace in more than 6 years resulting from the sluggish global growth and strong US dollar, which raise concerns about the momentum in the US economy. The unemployment claims increased last week to a 6-month high spurring worry about whether the job growth has been firm or not.

The downbeat economic outlook has been an obstacle to the Fed’s decision to raise interest rate and also the assistance for the precious metals.

A weaker dollar triggers the Dollar index shed 0.3% to 99.30, in addition, served as a “leverage” to the gold.

After the European Central Bank (ECB) sparked a brief rally in the risk assets such as stocks by raising the prospect of more stimulus, investors are increasingly focused on the meetings of the U.S. Federal Reserve and Bank of Japan this week for more dovish tone, which leave the currencies weaker and the haven higher as the demand grew up.

The turmoil in the stocks market has returned as oil price breaks $30/barrel amid expectations US stockpiles data will tensify concerns over the global glut on slower global growth and weakness in the emerging markets . Chinese equities slump, Hang Sheng Index declined 2.5% whlie the Shanghai Composite Index dropped 6.4%, led by energy companies. The market uncertainty has called for a great demand for a safer asset such as gold.

Today, some of the key economic data including CB consumer confidence, manufacturing and services data will be released, signaling more firmer clues about the US economy.

CB Consumer Confidence scheduled later today is a survey by the Conference Board that measures how optimistic or pessimistic consumers are with respect to the economy in the near future. If the consumers are optimistic, they will tend to purchase more goods and services, which in turn increase the spending and inevitably stimulate the whole economy. The forecast will be 96.6, a little greater than that in December and the 2-month high in forecast. The income growth and the solid job gains may be the thing that lie behind this figure.

The services and manuafacturing index for this month is prejected to contract more with the production shrinking for 1-year low. The positive confidence is likely to offet with the two data, therefore the gold demand still got the momentum to rise and so does the price of gold.

TECHNICAL ANALYSIS

Technical Analysis

Currently, at 17:00 pm, GMT +7, the gold price is trading at $1,113.78/oz, up 0.5% compared with the openning price at $1,107.97/oz.

The Fibonacci retracement showing the gold price is trading between the level 23.6% at $1,109.90/oz and the level 0.0% at $1,117.40/oz, approaching the upper level considered as the highest resistance at $1,117/oz. During the Asia trade, the price movement has mainly formed the upwards trends as the demand for the Lunar New Year and for the safe-haven assets amid the glooming equities market. The trend is now converging, heading to the upper price at more than the current price $1,113/oz. During yesterday’ s trading, the price had broken three straight resistance levels and the strong recovery is expected to carry on during today’s session. The MuaEA Signal Trend which showed buying signals from yesterday has gained profits for investors.

Regarding the RSI (14) index, the indicator shows 65.49 points, pointing out the strong upwards trend. The buying positions appear to exceed the selling ones. The level has not reached level 70 indicating that the buying positions have not put an end yet.

Deriving from the chart H1, the ADX index is above the 50 level which shows that the current trend remains robust, confirming the upwards price is on the track. The +DI is above the -DI with a wide gap, signalling the increase in the gold price. Also, the gold price is in the range between the upper line and the average line according to the Bollinger Band.

SENTIMENT ANALYSIS

Sentiment Analysis

The price trading is moving up recently with the overwhelming green prices. The market sentiment depends on the tone in the FOMC policy meeting for the change in the future hike rate. The fewer chance of the next increase means the market will focus on other less risky assets such as gold. The bodies of candles seem to be average with almost the upward shadow indicating that the buying forces are not great indeed.

The easing policy hint from the Eurozone economy and the Bank of Japan also add to the concern among investors that encourages them to get more gold for the aim of stabilizing the investment portfolio.

The market anticipates the US economic growth will stall in the fourth quarter with GDP 0.8%. The concern about the growth overseas and the US economy outlook arises, pushing up the demand for a safer asset.

RISK

Risk

The consumer confidence index is still forecast to get high as the job market has improved substantially, which will play a vital role in the Fed tightening path, and weigh on the price of the precious gold.

The house price index (HPI) annually reaches as high as 5.7% – the highest since October 2014, which results from the a great deal of the household and consumer spending and shows the confidence in consumption. This data has brought the shadow into the bearish market of gold, and put a stress on the price.

The European Central Bank president Mario Draghi’s comment has hinted more stimulus, which supports the global stock market and put the precious metals aside.

Market Commentary

Today, the price may rise as the FOMC will give some dovish tone on the future increase, regardless of positive consumer confidence index and the manuafacturing and services data. Given that case, the price tends to rise as much as $1,120/oz.

However, as mentioned in the Risk sectors, the price may go down as low as $1,100/oz.

Analyses of Group Fiinvesting

 

Linh Nhan