The bullish rally on gold | 22 May 2020

#SP500:

We are expecting the development of a bullish rally. To date, Congress has provided roughly $2.9 trillion in fiscal support for households, businesses, health-care providers, and state and local governments—about 14 percent of gross domestic product. The additional backing from the Treasury, facilities to more directly support the flow of credit to households, businesses, and state and local governments. The temporary regulatory adjustments to encourage and allow banks to expand their balance sheets to support their household and business customers. This is a positive signal for the stock market!

Trading recommendation: Buy 2890 and take profit 2930.

XAUUSD:

Negative macroeconomic statistics from the United States will have a positive impact on the price of gold. Gold and the U.S. dollar have an inverse correlation. The Federal Reserve said manufacturing production plunged 13.7%, the biggest drop in the series' history. Data for March was revised to show output at factories dropping 5.5% instead of decreasing 6.3% as previously reported. The Census Bureau said that retail sales fell by 16.4%, after a drop of 8.4% in March. That is considerably worse than the 12% fall expected by analysts ahead of time. The March drop was a tad less steep than the initial estimate of 8.7%. U.S. data for the month of April was disastrous, adding to fears of permanent damage to the economy. The U.S. economy shrank 4.8% in the first three months of 2020 for the sharpest economic decline since the Great Recession of 2007 to 2009.

Trading recommendation: Buy 1757 and take profit 1775.

#WTI:

WTI crude neared a two-month high. The IEA boosted its 2020 global demand forecast for oil by 700,000 barrels per day, noting that uptake for crude has “improved somewhat”. Demand aside, the Paris-based agency projected that U.S. production could be down as much 2.8 million barrels per day, higher than the notional 2 million barrels offered by the Trump administration under the GLOPEC output cuts deal among OPEC, Russia, the U.S. and other world oil producers. This is a positive signal for oil quotes!

Trading recommendation: Buy 30.68 and take profit 31.48