· Gold prices fell over 1% on Tuesday, extending losses from the previous session's meltdown, as investors continued to sell assets to keep their money in cash because of heightened concerns over the economic toll of the coronavirus outbreak.
Autocatalyst metals platinum and palladium rose more than 5% each in early trade before paring gains. The metals were the worst hit in Monday's free fall since they are also considered industrial metals.
Spot gold fell 1.1% to $1,496.78 per ounce by 0540 GMT, having slumped as much as 5.1% on Monday to its lowest since November 2019. U.S. gold futures gained 1.1% to $1,503.20.
· "This is just a continuing trend of gold positions being liquidated as equity markets collapse. There is a trend towards holding cash in the market and that's being reflected in gold," said Jeffrey Halley, a senior market analyst at OANDA.
"With the meltdown in asset markets, it's clear that longer-term gold, silver and palladium holders are liquidating profitable positions to cover losses elsewhere."
Asian shares fell in a topsy-turvy session following one of Wall Street's biggest one-day routs in history as headlines about the outbreak and its global economic impact whiplashed investor sentiment.
Countries and major central banks have ramped up measures to protect their economies from the virus outbreak, which has infected more than 174,100 people globally.
The U.S. Federal Reserve slashed rates back to near zero in a surprise move on Sunday, to support a rapidly disintegrating global economy.
· With a lot of risks in the market, which should have been supportive for bullion, the Fed hit the panic button, signaling concerns over the economic recovery, said Stephen Innes, chief market strategist at AxiCorp.
"But we have to weigh it with the fact that equities are probably going to fall further as the economic damage is going to come out worse than expected. So, bad news and good news is both bad for gold right now," he said.
· Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust fell 0.2% to 929.84 tonnes on Monday.
· Gold Price Analysis: Drops back below $1,500, focus on key Fibonacci levels
Following the latest pullback from $1,520, Gold prices decline to $1,493, down 1.27%, as the global markets await European traders on Tuesday.
With that, the bullion slips back below 200-day SMA while inching closer to 50% Fibonacci retracement of its run-up from May 2019 to March 2020, at $1,483.
During the quote’s further downside below 50% Fibonacci retracement, November 2019 low surrounding $1,445 and 61.8% of Fibonacci retracement near $1,432 can please the bears.
On the flip side, a confluence of 100-day SMA and 38.2% Fibonacci retracement restricts the yellow metal’s short-term recovery moves near $1,535/36.
Beyond that, lows marked during late-January 2020, also during the February month, around $1,545/46, could question the bulls.
· Gold Takes A Dive!
Gold was on a strong move to the upside since finding support in August 2018 and rose by 46%.
All trends come to an end at some point but Gold has recently come to a sharp halt.
Despite the recent decline, due to the recent health epidemics that are affecting the global
markets, the trend may not be over just yet.
Price created a high at $1,703 on March 9th 2020 but has since declined by over 12%.
At first glance, things don’t appear to be going well for Gold but price has now found comfort
at a support level which may stop further declines.
There are two levels of support holding price up. The first one is the 200 simple moving.
Price did trade below the 200sma but has now moved back above it. This gives us an idea that
this area may hold strong going forward.
The second one is the $1,500 round number which is a psychological area of support which price
struggled to break through in 2019. It appears to be causing a problem for the sellers now and
helping to assist the buyers in keeping price up.
Right now the market is rattled by recent global events but once the dust settles and if Gold
remains above support then it may not be long before we see a resumption of the uptrend.
We need to stand aside for the meantime until we see further confirmation of a continuation
of the bull trend.
· Among other precious metals, palladium rose 2.1% to $1,651.26 per ounce, having plummeted as much as 18% in the previous session.
Platinum was steady at $663.09, having posted its biggest one-day percentage decline ever on Monday.
Silver fell 1.5% to $12.71, after touching its lowest since 2009 in the last session.
Reference: Reuters, FXStreet, Trading View
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