Gold: Bulls keep the baton above $1600 amid coronavirus fears
|- Gold prices remain positive for the fourth day in a row.
- Headlines that coronavirus will weigh on global top-tiers, central bank decisions recently reiterated the fears of the epidemic.
- Coronavirus updates from China and abroad will be the key.
Gold stays positive around $1,622 ahead of the Tokyo open during Friday’s Asian session. While coronavirus has been the key to the bullion’s run-up, downbeat fundamentals from major economies also please the bulls.
Coronavirus updates…
The latest numbers from Hubei, as of February 20, suggest there are 411 new cases and 115 new deaths versus 349 new cases of infection and 108 deaths by the end of February 19. Despite the second change in the methodology to count, there have been more than 2,144 deaths and 62,442 infections in the region so far due to the epidemic. Also to note is the pace of contagion surrounding Japan, South Korea and Singapore.
While identifying the fears of the disease, the Japanese Trade Union Confederation (Rengo) recently called off its rally that was earlier scheduled for March 03 whereas the pacesetter in the annual shunto wage negotiations, Toyota’s union, also canceled its convention. Further, Germany’s monthly report from the Finance Ministry also cited fears while anticipating weaker global demand.
As portraying the broad risk-off, the US 10-year treasury yields extend Thursday’s declines to near 1.51% whereas S&P 500 Futures also lose 0.20% to 3,360 by the press time.
Central banks are also worried…
In addition to the recent statements citing fears of the Chinese epidemic, global central banks ranging from the RBA to the PBOC have shown worries as the latest numbers, except the US, are downbeat.
While identifying this, the RBNZ Governor Adrian Orr said that the bank needs to be prepared for the unanticipated.
Investors will now keep eyes on coronavirus news as well as the macros for fresh impulse. The latest data concerning Australia’s activity and Japanese inflation didn’t offer any surprises.
Technical Analysis
FXStreet’s Yohay Elam relies on the Technical Confluence Indicator to suggest $1,626 as the next upside target:
The Technical Confluences Indicator is showing that support lines are stronger than resistance, implying that the rally still has room to run. XAU/USD is benefiting from two substantial clusters of support. The first is at $1,613 – above the January low – and it consists of the previous daily high and the Pivot Point one-week Resistance 3. The upside target is $1,626 where XAU/USD faces fiercer resistance – the long-term Pivot Point one-month Resistance 1 awaits it there.
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