A major technology company – Apple Inc. – this week issued a warning that sales will fall short of its forecast for the current quarter since the virus has weakened both production and demand in China.
April gold generated technical follow-through this week when the metal broke above the previous high for the year of $1,619.60 hit back on Jan. 8, when the worry was that the U.S. and Iran might go to war.
"We've got a trend going," said John Weyer, co-director of commercial hedging with Walsh Trading. "I don't see anything that's going to stop it."
Of course, a contrarian would say when expectations in any market are this one-sided, all of the potential near-term buying or selling may have already occurred, meaning the market could end up going the other way.
"I am bullish for next week," said Kevin Grady, president of Phoenix Futures and Options LLC. "Gold's rally is quite impressive, especially in the face of a surging U.S. dollar. The coronavirus statistics coming out of China are getting worse. Until we start to see the tide turn, gold should hold a bid."
Phil Flynn, senior market analyst with at Price Futures Group, commented that gold is in "breakout mode," thus, he sees more gains ahead.
"Gold has gotten a boost because China continues to take measures to stimulate the economy and shield it from the coronavirus," Flynn said. "Also, the doomsday-buying effect is also in play as the coronavirus is causing some real fear and conspiracy theories."
Afshin Nabavi, head of trading with MKS, said gold is now poised to run higher toward $1,650 and $1,675. However, he added, "a bit of correction to the downside would be healthy" for the gold market.
Richard Baker, editor of the Eureka Miner's Report, said gold likely "will march inexorably towards $1,800" since "we haven't seen the worst from the coronavirus." He listed a target of $1,680 for Comex gold next week.
"As gold hits seven-year highs, it is interesting to note the Japanese yen has weakened to levels not seen since April 2019," Baker said. "Coronavirus cases in Japan have essentially removed its currency from safe-haven status….As a consequence, the lustrous metal and U.S. Treasurys have become the global safe-haven of choice as 10-year yields approach the September lows of last year during the U.S.-China trade negotiation brouhaha."
Jim Wyckoff, senior technical analyst with Kitco, said the gold market's technical posture "turned more bullish this week" and the coronavirus impact on global economy "is perceived to be getting worse."
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, also said higher.
"It's not only concern about [the] coronavirus, but investors are increasingly looking for some insurance, including against a volatile stock market," he said.
Reference: Kitco
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