· Gold gains on virus risks, but uptick in stocks caps gains
Gold edged up on Thursday on safe-haven buying fueled by worries about the fast-spreading coronavirus, but a rise in equity markets limited bullion’s gains.
Spot gold inched higher by 0.2% to $1,639.44 per ounce by 0335 GMT. U.S. gold futures were up 0.2% to $1,640.10.
· “When we see support for both gold and the dollar, it’s an indication of safe-haven desire from investors,” said Michael McCarthy, chief market strategist at CMC Markets.
The dollar recovered following recent declines, finding support from robust jobs data from the United States on Wednesday.
The U.S. Federal Reserve’s surprise interest rate cut on Tuesday to shield the world’s largest economy from the economic impact of the epidemic also supported non-yielding bullion.
Equities too latched on to global measures to battle the fast-spreading virus outbreak, with Asian shares also tracking strong overnight gains on Wall Street following the strong performance of former U.S. Vice President Joe Biden in the Democratic nomination campaign.
· “If this (equity) rally continues for 3-4 days, markets could take that as an all-clear in terms of economic impact of the virus and we might see pressure on gold. It’s a very volatile situation,” CMC Markets’ McCarthy said.
However, the virus risks continued to support safe-haven interest.
The International Monetary Fund said on Wednesday the global spread has crushed hopes for stronger growth this year, while a Fed report showed there are signs the epidemic has begun to weigh on business sentiment in the United States as well.
· Investors are now waiting to see whether the European Central Bank would also announce new stimulus, with euro zone markets pricing in a 90% chance of deposit rate reduction next week.
In other metals, palladium slipped 1.7% to $2,532.40 per ounce.
“The auto sector supply chain will be impacted by COVID-19.
· Although, this demand shock is expected to have limited impact on palladium due to structural deficit backdrop, we see room for further setbacks following the recent rally,” ANZ Bank analysts said in a note.
· Gold Price Analysis: Consolidates in a range below weekly tops, around $1640 region
Gold seesawed between tepid gains/minor losses and remained confined in a narrow trading band – just below weekly tops – through the early North-American session.
The precious metal continued facing some resistance near the $1652 horizontal zone, which should now act as a key pivotal point for the next leg of a directional move.
Meanwhile, the intraday pullback found some support near a confluence region comprising of 200-hour SMA and 23.6% Fibonacci of the $1563-$1653 latest positive move.
Weakness below the mentioned support could accelerate the slide towards another confluence support – comprising of 100/50-hour SMAs and a short-term ascending trend-line.
Meanwhile, technical indicators on hourly/daily charts have been easing from higher levels but held in the bullish territory, supporting prospects for the emergence of some dip-buying.
Hence, any meaningful pullback might still be seen as a buying opportunity and should help limit the downside amid concerns over the impact of the coronavirus outbreak on the global economy.
· Gold is showing signs of life in Asia despite the uptick in the Asian stocks.
The yellow metal is currently trading at $1,638 per Oz, having defended the 200-hour moving average line at $1,634 during the overnight trade.
The Asian equities are flashing green with Japan's Nikkei index adding 0.70% at press time. Other regional heavyweights like South Korea's Kospi, Hong Kong's Hang Seng and the Shanghai Composite are also reporting moderate gains.
The US stocks rallied Wednesday, pushing gold lower from $1,652 to $1,635 as the US lawmakers reached an $8.3 billion emergency coronavirus bill aimed at fast-tracking research and development for treatments and a vaccine, sending stocks higher.
· The autocatalyst slumped as much as 13% on Feb. 28, following a record run to an all-time high of $2,875.50 on Feb. 27 due to a stark supply shortfall.
Silver inched up 0.2% to $17.21 per ounce, while platinum shed 0.4% to $868.79.
Reference: Reuters , FX Street
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