Gold buyers catch a breath despite risk aversion in bonds, stocks
|- Gold prices pull back from nine-day high as bulls are catching breath amid risk aversion elsewhere.
- The US 10-year treasury yields drop to a fresh record low, Asian stocks also nosedive.
- Fed policymakers pour cold water on expectations of another rate cut in March.
- Coronavirus cases keep increasing, market fears spread in the US.
Gold prices slip from the monthly high to $1,671.72 by the press time of the Asian session on Friday. The yellow metal surged the previous day amid broad US dollar weakness and increasing worries concerning coronavirus (COVID-19). However, the bulls seem to catch breath despite rising safe-haven demand of the US bonds and declining Asian stocks.
The US 10-year treasury yields drop to the record low of 0.843% down eight pips whereas Japan’s NIKKEI and Hong Kong’s HANG SENG both are down more than 2.0%.
The reason could be traced from the market’s fear of coronavirus-led economic pessimism. Latest numbers from the US, China and South Korea signal that the deadly virus continues to spread despite the governments’ efforts.
It’s worth mentioning that the US Vice President’s comments of lacking virus testing kits as well as Japan’s policymaker’s statements seem to weigh on the trade sentiment off-late.
Even so, the US dollar fails to enjoy the risk-off as traders are increasingly expecting another rate cut from the US Federal Reserve. The Fed policymakers have so far turned down any such aspects for their March 18 meeting, except for the latest one coming from the New York Fed President John Williams.
Although COVID-19 headlines will be the key to determine near-term market moves, the pre-NFP mood of the market might weigh on the further momentum of assets.
Technical Analysis
Given the bullion’s nearness to record high amid bullish MACD, gold prices are likely to rise further towards an ascending trend line joining the highs marked in January and February, currently near $1,710. On the downside, $1,660 can act as immediate support ahead of $1,650/48 and $1,630 rest-points.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.