· Gold rose on Friday, on track to post its biggest weekly gain since October 2011, over fears that the global coronavirus outbreak could deal a hard blow to the world economy.
Spot gold was up 0.1% to $1,671.73 per ounce by 0640 GMT, having risen more than 2% in the previous session.
U.S. gold futures rose 0.3% to $1,673.30.
· "Gold is moving higher because markets are expecting further cuts and the ongoing risk-aversion right now as (wider) markets are concerned," said DailyFx currency strategist Ilya Spivak.
"The biggest thing here is how worried do markets remain about this coronavirus impact."
· The metal has gained as much as 5.8% so far this week as worries over the coronavirus sent investors scurrying for safe-havens, with the U.S. Federal Reserve issuing an emergency 50 basis point interest rate cut on Tuesday.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
· "We've seen a consistent switch out of equities into gold as a consequence of the worsening macro backdrop, and that's something gold will continue to see in the foreseeable future," ANZ analyst Daniel Hynes said.
· Asian stocks on Friday tumbled following Wall Street, while U.S. 10-year Treasury yields fell to a record low, sending the dollar to a two-month low against key rivals.
· Globally, there have been over 98,000 cases and more than 3,300 deaths from the coronavirus. Mainland China, where the virus was discovered in late 2019, reported 143 new confirmed cases of infection on Thursday.
The wide-spread epidemic has forced many cities and countries to temporarily close industrial operations, while travel restrictions have weighed on service sectors.
The epidemic poses "evolving risks" to the U.S. economy and U.S. central bank officials are monitoring developments closely, New York Federal Reserve President John Williams said on Thursday.
· Palladium fell 0.7% to $2,515.85 per ounce.
"Palladium continues to outperform platinum but we also (have) the issue around industrial demand from the auto sector, which is being hit pretty hard at the moment," ANZ's Hynes said.
· The autocatalyst metal slumped as much as 13% on Feb. 28, after hitting an all-time high of $2,875.50 the day before due to a stark supply shortfall.
· Silver was down 0.5% to $17.32 an ounce, while platinum slid 1.1% to $854.72.
· Gold Price Analysis: Bulls keep the baton with eyes on $1,710
Despite witnessing a pullback from the nine-day high flashed during Thursday, Gold buyers remain hopeful as the bullion nears the record high amid bullish MACD. The yellow metal takes rounds to $1,669.76, down 0.16%, at the start of the Asian session on Friday.
While the previous day’s high surrounding $1,675 acts as the immediate upside barrier, February month top, also the multi-year peak, around $1,690 becomes the key for the bulls.
Should there be a further upside beyond $1,690, which is more likely based on the technical as well as the fundamental point of view, $1,700 and an ascending trend line joining the highs marked in January and February, currently near $1,710, will lure the traders.
On the downside, $1,660 can act as immediate support ahead of $1,650/48 and $1,630 rest-points.
However, the precious metal’s declines below $1,630 will be challenged by a horizontal line established since January 08, around $1,611, a break of which could recall a 50-day SMA level of $1,580 on the charts.
· Gold Price Forecast: Lower Rates, Lingering Risk Aversion to Boost XAU
Gold prices may climb higher in the weeks ahead following an emergency rate cut from the Federal Reserve.While the decision was a shock to most, some markets have already begun to price in another 50bps reduction to the Federal Funds Rate at the March 18 Fed meeting. The prospect of lower rates should fuel XAU/USD price gains in the weeks ahead as traders seek protection from inflation.
Gold Price Chart: Daily Time Frame (January 2019 – March 2020)
Standing in its path higher are two nearby levels of possible resistance. The first coincides with the metal’s February 2013 swing-high and the recent peak on February 24 around $1,690. It is followed by a Fibonacci level at $1,712. Together, the two levels will look to keep price contained as traders assess the fundamental cases for the commodity and bulls aim higher.
Reference: Reuters , FX Street
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