Gold: Bulls cheer the global drive to safeguard against COVID-19

Gold prices remain 0.52% up to $1,644.30 during the Asian session on Wednesday. The yellow metal surged the previous day as the US Federal Reserve followed the RBA in announcing rate cuts. The bullion’s current moves could be attributed to the latest catalysts showing a sustained drive to tame the economic implications of coronavirus (COVID-19).

Following the RBA’s 0.25% rate cut, the Fed surprised global markets with a 0.50% rate reduction, the first unscheduled move since 2008. The move propelled the rush to risk-safety as investors fear that the economic impacts of the COVID-19 are larger than initially feared.

Recently joining the league was the Hong Kong Monetary Authority (HKMA) that announced a 0.50% cut to its base rate. Also marking the global drive to safeguard against the deadly virus was the World Bank Group that announced a $12 billion immediate support package.

It should also be noted that China’s Securities Journal signaled that the People’s Bank of China (PBOC) will undertake additional open market operations (OMO) during the month.

Given the increasing efforts by global central banks, institutions, the market’s risk-off gained additional downside. While portraying the same, the US 10-year treasury yields drop to the fresh record low of 0.978% whereas S&P 500 Futures declines 0.41% to 3,009.

With that markets seem to have given a little importance to the US Fed policymaker Charles Evans who tried to placate traders after the Fed’s shock rate cut.

Technical Analysis

Unless closing below 50-day SMA level of $1,575, the bullion is likely to keep running upwards to $1,666 and $1,690.