· Gold prices dipped on Thursday after China unveiled measures to soften the economic impact of the coronavirus outbreak, but the metal held close to a nearly seven-year peak scaled in the previous session as concerns over the epidemic prevailed.
Spot gold was down 0.2% at $1,608.96 per ounce, as of 0550 GMT. U.S. gold futures were flat at $1,611.90.
· "It seems to be a bit more corrective mostly because ...it's not just in gold that we are seeing a bit of a walk-back in risk-off dynamics, but across a variety of assets," said DailyFx currency strategist Ilya Spivak.
· China's central Hubei province had 349 new confirmed cases of coronavirus on Wednesday, the province's health commission said, down from 1,693 a day earlier and the lowest since Jan. 25, although it was accompanied by a change in methodology.
Beijing cut its benchmark lending rate to support an economy hit by the epidemic, keeping Chinese stocks supported.
Also limiting any uptick in gold prices, the dollar was sucking up funds across Asia after a steep and sudden slide in the Japanese yen called into question its safe-haven status.
· Analysts, however, said concerns over the outbreak capped losses in bullion, keeping prices close to an intraday high of $1,612.62 an ounce hit on Wednesday, which was the highest since March 25, 2013.
There's still a lot of haven-based buying of gold, said Jeffrey Halley, senior market analyst at OANDA.
"I suspect this means not everybody is buying into the hype that China is on the verge of controlling this virus."
· Actions by the Federal Reserve would also continue to determine gold's trajectory, analysts said.
· U.S. Fed policymakers were cautiously optimistic about their ability to hold interest rates steady this year, minutes of the central bank's last policy meeting showed on Wednesday, even as they acknowledged new risks caused by the epidemic.
Lower interest rate reduces the opportunity cost of holding non-yielding bullion.
· "Short-term, gold prices should stay supported and test new highs as growth risks are reassessed, but absolute returns may be limited if coronavirus-related disruptions are limited to 1Q," UBS analyst said in a note dated Feb. 19.
· Elsewhere, deficit-hit palladium advanced 0.5% to $2,727.91 an ounce, having touched a record high of $2,841.54 in the previous session.
· Silver shed 0.1% to $18.38, but hovered near its highest in more than a month hit on Wednesday, while platinum fell 0.9% to $996.
· A combination of gold price rally in the US dollar terms and a sell-off in EUR/USD has pushed the yellow metal to record highs in the single currency terms.
XAU/EUR or gold in EUR terms is currently trading at 1,490 per Oz, having hit a lifetime high of 1,494 during the overnight trade.
· Gold Price Analysis: Pulls back amid overbought RSI, multiple upside barriers ahead
Gold prices decline to $1,606 during the early Thursday. The yellow metal surged to the highest since March 2013 the previous day but failed to hold onto gains due to the overbought RSI conditions.
As a result, sellers are now awaiting a downside break of $1,600 to aim for the early-month high nearing $1,594.
However, 21-day SMA and an upward sloping trend line from December 2019, around $1,577 and $1,572 respectively, will limit the bullion’s further declines.
It should be noted that the precious metal’s downside past-$1,572 will confirm a broad bearish rising wedge formation and can trigger a fresh down-leg towards the late-2019 area.
On the upside, March 2013 high near $1,617 acts as the immediate resistance ahead of the rising trendline connecting highs marked during September 2019 and January 2020, close to $1630/31.
· CNBC reports US investment bank Citi believes the gold price will benefit from investors looking for yield and from buying related to the metal’s status as a safe haven in times of turmoil.
Citi has one of the more bullish forecasts out there – the bank believes gold could add another $100 an ounce within six months and top $2,000 per ounce in the next 12 to 24 months:
Reference: Reuters , FX Street
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