Fundamental analysis: It is not the right time to do SELL on gold yet

2020.2.10-ZHENQUANXI-ENGLISH

Independent Analyst: Zhen Quan Xi

Last week, NFP data is better than previous mark and expectation. logically, we suppose to SELL on
gold price, but in reality, gold price “accidently” rises up to $10.

US Department of Labour releases a data that shows non-farm employment rate in January rise up
to 225,000 people, way more than wall street prediction at 160,000, previous mark also corrected
up to 147,000, this support US employement market to be stonger.

According to the US Department of Employement, In January, the employment in contruction,

heath care, transportation dan warehouse has risen. 3 months ago, the average of non-farm
employment increase is 211,000.

US unemployment rate has increased by 0.1% become 3.6%, but the reason make sense as the
employee participation rate increased by 0.2% to 63.4%, the highest point since June 2013.

Labour market indicators that cover more broadly also increased, which will make workers and
those who work part time for economic reasons lose their enthusiasm. The indicator rose 0.2% to
6.9%. The so-called real unemployment rate was previously at the lowest level in the history of the
data series.

However, the employment population rate in the household survey increased to 61.2%, the highest
point since November 2008, rise up by 0.5% compared to the last year data.

According to some of the workers, there are more good news, which are the average of hourly wage
compared to the last year data has increased by 3.1% become $28,44, higher than the increase
expectation of 3%. It shows that in 18 consecutive months the wage is increasing more than 3%, the
December’s data that was release with a 2.9% increase is corrected up to 3%, the average of weekly
work time is still 34.3 hours unchanged.

The data correction a few months ago also at least supported the employment data. On November,
approximately increase 5,000-261,000 people. On December, approximately increase 2,000-147,000
people.

There is a market player that said “the low working hour per week is very worrying for some people.
This is a problem because many people find it difficult to get the right time for them to work in
sufficient time so that they get a job that is worth it. This could also be a sign that businessmen are
worried that demand for goods and services will weaken in the coming months.”

Most of the market participant are currently focusing on the down correction of the employment
data. Although last month’s NFP data has a huge increase, but December 2019’s NFP data was
corrected down to 500,000 people.

A time bomb is ticking under those details. Due to the downside correction on last year’s
employment data, it showed that the US employment data was not as excellent as stated in the NFP
data along with the rebound of unemployment rate making the investors concerned about the not-
so-good US economy as stated by President Trump. This made the gold price drop and plummet in
no time.

At the same time, the data also showed the ETF gold across the world on Monday surging to 2,573.9
tons, exceeding the highest mark reached in 2012. Last Tuesday, the price surged to 2,886 tons,
reaching the new highest record.

The gold reserve of ETF has ever reached its highest mark in December 2012. At that time, the Fed
maintained its interest rate close to 0-level while also strengthening the asset purchase plan,
supporting the economy, and reducing the unemployment rate.

Although the US stock keeps reaching its highest high, the scale of ETF gold reserve is still increasing
which signs that the investor are enthusiast to own gold through ETF which hasn’t ever occurred
before.

Hence, before gaining an effective control over the outbreak happening in China, small movement
by Iran provoking the US in the situation which gold price acts as a safe-haven asset plunging down,
the down-corrected US employment data last year have discouraged the investor to underestimate
the gold demand as a safe-haven asset.
Trading tactic: the gold price is predicted to have a huge fluctuation this week, except if suddenly
there’s a provocative news that benefit the bulls/bears, then they have enough power to push the
gold price up/down significantly. If not, the market will be dominated by various fluctuation under
the dominating profit taking and liquidation by both parties. We can focus on each stable down
wave, this is a good opportunity to do BUY, set a little stop loss and get a huge profit.

Technical analysis: pay attention to the first support below at (1562) if not breakthrough can BUY as
the first note. After profiting, push forward to keep the capital fund’s safety, then chase a bigger
profit. If the loss touched the capital fund, we still can pay attention to the second support at (1555).
If not breakthrough, can BUY as the second note, if it breakthrough can pay attention to the third
support at (1548). If not breakthrough, can BUY as the third note.

First support’s rebound, look up to the 50% Fibonacci retracement line {H1} at (1.570) as the first
stop profit, the second stop profit at (1.577).

Second support’s rebound, look up to the first support at (1.562).

Third support’s rebound, look up to the second support at (1.555).