Gold building a bullish case as COVID-19 reigns

Gold is currently trading at $1,592.00, +0.22% on the day and travelling between a low of $1,587.84 and a high of $1,596.20 on a spot basis, albeit following a negative close in futures overnight for a fourth straight session loss despite the risks of COVID-19's spread.

The gold price has lost some bullish support of late as the US dollar moves higher, ending the last quarter on the front foot as a relatively illiquid market sees exaggerated moves adding to the upside support. 

Gold bulls lining up

"The improvement in USD liquidity should help remove some left tail risk, while the extraordinary QE package, combined with large government stimulus packages reek of MMT, which should eventually send real rates on a downward trajectory, particularly as global central banks will be willing to let inflation run hot as part of their symmetric targeting framework," analysts at TD Securities explained. "This should help cement a multi-year rally in the yellow metal."

Meanwhile, COVID-19 continues to spread and made for a dismal start for the quarter. More on that here, Wall Street Close: Bruising losses in US stocks resulting in the worst start to a quarter on record, whereby the Dow Jones Industrial Average ended around 974 points lower, down 4.4%, near 20,943 after dropping more than 23% for its biggest first-quarter decline on record. 

Indeed, there has been high anxiety over the trajectory in COVID-19 cases and uncertainty, which markets loath, and the prospects of another sovereign debt crisis is one to watch for further upside in gold. Extended deadlines for lockdowns in various nations over the world reinforce the bullish narrative for the precious metal.

Gold levels