The Federal Reserve is cutting interest rates to zero
In an emergency move, and for the second time in less than two weeks, the Federal Reserve cut interest rates and said in a statement that they are cutting interest rates to a target range between 0% and 0.25%, and in a comment by President Trump, he congratulated the Federal Reserve on reducing interest rates, describing it as a wonderful job.
Worst week for gold since 1983 strips the metal of safe haven status
Gold recorded its worst week in more than three decades to join the collapse in global markets that the traditional safe haven assets could not avoid. The escape from gold came to strip the precious metal from its traditional status as a safe haven and highlights the intensity of the selling pressure in every corner of the market, but despite the market turmoil this week, the long-term and medium-term prospects for the metal are still bullish and demand for the metal as a store of value could return if the coronavirus causes a recession in the global economy.
American stocks recorded their worst day since 1987
The regions that will be mostly affected by the Coronavirus are the United States and Europe, and this appears in the US stock markets on registering Monday and Thursday their worst performance since 1987, before the S&P500 and Dow Jones rose more than 9% on Friday when President Donald Trump announced a national emergency regarding coronavirus outbreaks, which opened the door to much-needed federal assistance. And since the Federal Reserve has already cut interest rates to zero at once, this may be a wonderful opportunity to buy gold, on the other hand, a free fall in stock markets made the gold unable to escape the intense selling in the market last week, and fell victim to margin calls, which was indicated by Ryan MacKay, commodity strategist at TD Securities, who said, “When we see terrible days in stocks as we saw on Monday and Thursday, we tend to see Gold traders weaker alongside stock traders, because funds sell gold to cover margins and offset losses." It is expected that the stock markets will continue to decline until it becomes clear that the worst from the point of virus spreading has passed and we can witness an additional decrease in the price of gold during the next two weeks just because it is a source of liquidity that meets the people's need for money, also in addition to lowering interest rates, we are looking for a payment Of monetary and financial stimulus at the global level which will enhance the strength of gold.
Technical analysis of gold prices
Last week, gold made a quick and strong correction from the $1703.6 top to $1505.03, which is the ratio of 0.786 Fibonacci retracement, to bounce from there up again. The rebound was also based on the support of the 200-day moving average, which makes the current price of gold a great buying opportunity for traders, and analysts look at this decline as a buying opportunity, because the positive conditions of the precious metal that led to its rise are not over yet, and therefore gold is expected to trade between 1585 and 1540 dollars in the coming days.