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Profit Taking Appeared and Gold Correction Decline

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Daily Morning Review
Profit Taking Appeared and Gold Correction Decline
Independent Analyst: Teacher Liu
Date: 22 May 2020

Fundamental Analysis:
According to China Paper Gold, the world's largest gold-listed exchange-traded fund (ETF) had a position of 1112.32 tons as of May 22, and flat compared with the previous day, with a net increase of 55.82tons this month.

According to real-time statistics from Worldometers, at 6:47 on May 22, Beijing time, there were more than 5.18 million confirmed cases of the corona virus in the world, 5.18,481, and nearly 334,000 deaths, 333,967. Nearly a third of confirmed cases occur in the United States. There are almost 1.62 million confirmed cases of the corona virus in the United States, namely 16,185,353, and deaths have risen to more than 96,000, or 96,211. The number of countries with more than 100,000 confirmed cases worldwide has increased to 12, namely the United States, Spain, Italy, France, Britain, Germany, Turkey, Russia, Brazil, Iran, India, and Peru.

World Health Organization Director General Tedros Adhanom said that in the past 24 hours, WHO had received 106,000 cases, which was the largest number of new cases in the days since the outbreak, and nearly two-thirds of new cases came from only four countries. According to the WHO "Daily Report", most of the newly diagnosed cases originated in America, followed by Europe. The agency said the United States reported 45,251 new cases on Tuesday. According to the World Health Organization, Russia reported the second most cases on Tuesday, reaching 9263 cases.

According to US economic information, the annual monthly rate of new housing constructions in April fell by 30.2%, and the monthly rate of construction permits in April decreased by 20.8%. For the US real estate market, this year should have been an impressive year, but currently uncertainty takes over the stage.

In an interview on Sunday, the Fed Chairman Powell said that the US economy should recover steadily at the end of this year, but he also warned that a full recovery might have to wait until the end of 2021. He believes that to restore the consumer confidence back to the pre-pandemic levels, a generally effective vaccine is needed.

The latest effects of the corona virus epidemic continue to affect the US labor market, the number of initial jobless claims in the United States reached 2.438 million last week, which is expected to be 2.4 million. The previous value was revised from 2.981 million to 2.687 million. Although the total number of people adjusted for seasonal factors is still much higher than all data before the corona virus outbreak in the United States, that number has fallen for seven consecutive weeks and reached a record high of 6.9 million at the end of March. With doubts about economic recovery, some people turn to safe cash investments.

In May, the level of decline in private sector company activity in the United States slowed slightly. IHS Markit announced that the initial value of the manufacturing purchase index in May was 39.8, higher than 36.1 in April. According to Andrew Hunter, senior investment economist at Capital Economics, this data shows that "with the removal of steps to curb the first phase of the corona virus, economic activity has only gradually recovered."

On Wednesday, after US President Trump declared that "China's inability" caused "large-scale epidemics in worldwide," the US Senate passed laws that could prohibit Chinese companies like Alibaba and Baidu and others from being registered in the United States. Tight trade relations between China and the United States have prompted some trader turning closing gold positions and holding safe cash.

Until Wednesday, all states in the United States will begin to ease measures designed to prevent the spread of the coronavirus few weeks ago - although the rate of new cases in some states of the United States is still increasing. The last state to lift some restrictions is Connecticut, which will allow outdoor dining, offices, retail stores, malls, museums, and zoos to be reopened on Wednesday with basic restrictions.

Many countries in Europe announced that they would lift the travel restrictions in the Schengen region and agreed to set up a recovery fund of 500 billion euros, reinforcing market expectations for the economic development.

Kitco analyst Jim Wyckoff pointed out that the profit taking of some short-term futures traders has become a focus of the day. Today's rebound in the US dollar index is also a negative factor in the metal market. These two metals once again seem to be following the midday trading session of a declining the US stock index.

As the situation between China and the United States increasingly tense, concerns about recovery from an economic recession caused by the corona virus have affected market sentiment, and the major Wall Street's stock indexes have fallen. Against the background of tight between Sino-US trade relations, the US dollar has always been a relatively as a safe-heaven the strengthening of the US dollar has put pressure on the gold price. With trade tensions between the United States and China and doubts about economic recovery, some people are turning to a safe cash investment, and gold investors are taking advantage of the recent rebound. The gold price fell sharply by more than 1% on Thursday, and international spot gold at the end closed at $ 1725.90 an ounce.

Today's investment strategy:
Daily gold chart, gold price channel BOLL support, KD dead fork, four hour chart, gold price channel BOLL expansion, KD gold fork; 1 hour chart, channel gold price BOLL narrows, KD golden fork, the market show a surprise correction in the short term.

Today's action operations to enter a Buy position at a low price, see 1722.6-1728.6 buy, stop 1717.6, target 1732.6-1738.6; upper resistance: 1743.6; support: 1717.6.

Daily silver chart, silver price BOLL Mid-deviation, KD dead fork; 4 hour chart, silver price channel BOLL narrows, KD golden fork; 1 hour chart, silver price channel BOLL Mid-deviation, KD golden fork, the market shows a surprise correction in term.

Today's action operations to enter a Buy position at a low price, see 16.75-17.05 buy, stop loss 16.65, target level 17.15-17.45, upper resistance level: 17.63, support level: 16.58.

Previous day's price reference:

*Quotation information provided by “First Gold” is for reference only

Important information and events today:
11:00 Bank of Japan announces interest rate decision.
14:00 UK monthly rate of adjusted retail sales in April.
19:30 European Central Bank announces minutes of monetary policy meeting.
20:30 Canadian retail sales monthly rate in March.

Today's operation recommendation information is applicable to the system time GMT 02: 00-11: 00 (HKT10: 00-19: 00). For evening market operation recommendations, customers can refer to late market analysis and comments.

All the information mentioned above only represents the view of corresponding PT. Mentari Mulia Berjangka. The information, opinions and analysis contained herein are based on sources believed to be reliable but no representation, expressed or implied, is made as to its accuracy, completeness or correctness. PT. Mentari Mulia Berjangka is not responsible for the content of any analysis, advice, comment, suggestion, research report or market data in this article and link to third-party resources.