Gold: Steady above $1,560 amid fears of China’s coronavirus outbreak
- Gold prices await fresh clues to extend the previous two-day run-up.
- Fears of SARS return, trade war supports the safe-haven’s demand.
- Preliminary activity numbers from the US, Eurozone and the UK will decorate the economic calendar.
Gold stays modestly changed from Thursday’s close while taking rounds to $1,562.5 during Friday’s Asian session. The bullion recently benefited from the market’s risk-off sentiment amid fears emanating from China and trade headlines. However, US dollar gains seem to cap the yellow metal’s upside.
Leading the risk aversion is China’s outbreak of coronavirus. The humanly transmitted disease has so far taken 17 lives and spread out of the Chinese borders to renew the fears of Severe Acute Respiratory Syndrome (SARS) virus spread that took 774 lives in 2002/03. The latest update suggests that Japan confirmed the second case of coronavirus while the World Health Organization (WHO) still believes its too early to term it as an international threat.
On the trade front, markets seem to have diverted from the US-China trade war but the US-EU tussle is gaining the major attention off-late. The reason is the region’s status as the largest customer in the US. Also joining the trade war signals are the US President Donald Trump’s threats to levy tariffs on the UK.
Additionally, US President Trump’s impeachment hearings, as well as the geopolitical noises in the Middle East, also contribute to heavy the trade sentiment.
Investors will now look forward to the key activity numbers from the US, Eurozone and the UK to determine near-term trade direction. It should, however, be noted that the qualitative headlines will still keep the driver’s seat.
Technical Analysis
Short-term ascending trend channel favors further upside to $1,575 ahead of confronting January 06 high near $1,587 and $1,600 round-figure. Meanwhile, $1,550 and $1,535 could limit immediate declines.