· Gold edged lower on Friday after the World Health Organisation stopped short of declaring the China virus outbreak a global emergency, though prices were still on track to post a weekly gain.
Spot gold fell 0.1% to $1,561.86 per ounce by 0356 GMT. For the week, prices were on track to gain 0.3%. U.S. gold futures slipped 0.3% to $1,561.50.
· “There is not enough information out there in the street yet to be sure that we have a negative situation on our hand and that it would require a move into havens,” Jeffrey Halley, senior market analyst, OANDA, said.
“It is also the eve of the Chinese New Year, so mostly it’s just muted activity ahead of the holidays across Asia, with rising equities, earnings and stable U.S. data weighing on gold.”
· Asian shares inched higher following the WHO statement on Thursday that the new coronavirus that emerged in China and spread to several other countries does not yet constitute an international emergency.
However, investors remained concerned about the spread of the virus ahead of the Lunar New Year, a peak period of travel and gold demand in the region.
· Data on Thursday showed, the number of Americans filing for unemployment benefits increased less than expected last week, suggesting the labor market continues to tighten even as job growth is slowing.
Further weighing on bullion, the dollar against a basket of currencies, hovered near a one-month high hit in the previous session after the European Central Bank kept interest rates steady on Thursday.
Investors are now focused on the U.S. Federal Reserve’s first meeting of the year scheduled on Jan. 28-29.
· “With a low interest rate environment, geopolitical risks and uncertainties such as U.S. President’s impeachment, the conditions are still quite conduciveto further upside in gold,” ANZ analyst Daniel Hynes said.
· Spot gold may retrace into a range of $1,551 to $1,554 per ounce, said Reuters technical analyst Wang Tao.
· Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.2% to 900.58 tonnes on Thursday.
· FX Street: Gold in Demand Amidst Coronavirus Fears, $1568 Key
While the spread of coronavirus (or lack thereof) will drive gold prices in the short term, the longer-term technical outlook for the yellow metal is increasingly constructive. Gold prices have spent the last two weeks consolidating in the mid-$1500s following the early January spike on the US-Iran military skirmishes:
Gold’s longer-term trend remains clearly bullish, and prices may be forming an “ascending triangle” pattern with resistance around $1568 over the past week or two. A bullish breakout from this pattern, in-line with the underlying uptrend, could set the stage for a continuation to retest the 7-year highs near $1600. On the other hand, any signs that coronavirus is contained could serve as a near-term headwind for gold, though the medium-term uptrend remains intact as long as the yellow metal can hold above $1535.
· Gold Price Analysis: Portrays rising trend-channel on H4, Coronavirus in focus
Gold prices lack momentum while trading around $1,561.50 during early Friday. Even so, the bullion stays inside a short-term ascending trend-channel formation that portrays the strength of the underlying momentum. Also supporting the odds for the yellow metal's rise is the outbreak of China's coronavirus that helps the safe-havens.
With this, buyers can take aim at the formation resistance surrounding $1,574.50 if managed to break 50% Fibonacci retracement of the early-month upside, at $1,564.50.
In a case where the bulls dominate past-$1,575, 23.6% Fibonacci retracement level of $1,590 can offer an intermediate halt during the run-up to $1,600 and then to the monthly high near $1,612.
On the downside, 61.8% Fibonacci retracement and the channel’s support line will question the sellers close to $1,553 and $1,551. Also nearing will be $1,550 round-figure.
Given the bears’ ability to rule below $1,550, the current month’s low of $1,536 and $1,530 could flash on their radars while $1,517 could grab the spotlight afterward.
· Elsewhere, palladium dipped 0.8% to $2,440.82 an ounce, and was on track to register its worst week in five, falling about 1.7%.
Silver was flat at $17.79 and platinum edged lower by 0.3% to $999.37.
Reference: Reuters, FX Street
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