Gold is trading below $1,600 despite the risk-off sentiment stemming from coronavirus fears.
Experts talking to Bloomberg have said that the yellow metal has been hurt by margin calls as several funds needed the cash amid the stock market crash. The metal is used to a liquid asset that occurs in the equity market, according to Standard Chartered.
Others say that overbought conditions have triggered profit-taking.
Beforehand, safe-haven flows have pushed XAU/USD to a seven-year high of $1,689.
Gold has reached hit a low under $1,585 at the time of writing. It is hitting the 200 Simple Moving Average on the four-hour chart, suggesting a potential bounce. However, the Relative Strength Index is still above 30, thus outside oversold conditions.
Nevertheless, after this sharp correction, XAU/USD has room to rise, especially if Covid-19 remains a scare.
-- more to come
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