Gold: Bulls dominate beyond $1585 as coronavirus-led risk-off continues
- Gold refreshes two-week high amid fears emanating from China’s coronavirus.
- Caixin raise doubts on the official coronavirus figures whereas Japan registered widespread infection.
- RBA also cited coronavirus risk, following footsteps of IMF and WTO.
- The return of the US traders and Chinese headlines will be the keys to watch.
Gold prices remain 0.33% positive to stay mildly above $1586 during early Tuesday. The yellow failed to extend the previous day’s declines as the market’s fear wider than a registered outbreak of China’s coronavirus. Concerns about the deadly epidemic have also been raised by the key global institutions off-late.
Joining the league of International Monetary Fund (IMF) and World Trade Organization (WTO), the Reserve Bank of Australia’s (RBA) minutes statement recently cited coronavirus risk as material to China and thus to Australia.
Earlier, WTO’s Goods Trade gauge dropped to 95.5 in February from 96.6 in November, well below the index’s baseline of 100. Following the release, the institute mentioned that every component of the Goods Trade Barometer will be influenced by the economic impact of COVID-19 and the effectiveness of efforts to treat and contain the disease. Prior to that, the IMF’s Managing Director Kristalina Georgieva said that the China coronavirus outbreak (COVID-19) could have a significant impact on the world economy if it is not contained soon while hinting that the IMF could cut the global growth outlook over the virus outbreak.
Read: Coronavirus peaking? How will it impact the Chinese & wider economies and FX?
As per the latest statistics, China registered 1,886 new cases of coronavirus and 98 new deaths as of Feb 17. On the other hand, Hubei marked new 1.807 infected cases as well as 93 deaths on February 17. Even if the recent statistics show a sign of receding pace, the Caixin raised the doubts over the official figures.
It’s worth mentioning that the coronavirus infection rate in Japan is doubling every four days and has picked up since February 12.
To portray the broad risk-off, the US 10-year treasury yields decline more than two basis points to 1.564% whereas S&P 500 Futures also weaken 0.22% to 3,373 by the press time.
Investors will now focus on how the US traders will respond to the recent coronavirus updates while returning from the long weekend. On the economic calendar, the Empire State Manufacturing Index for February, expected 5.0 versus 4.8 prior, can please momentum traders.
Technical Analysis
Gold prices are all set to challenge the monthly top surrounding $1,594 while also targeting $1,600 round-figure. However, a downside break of a two-week-old rising support line, at $1,573 could trigger fresh pullback towards the sub-$1,550 area.