- Gold faces selling pressure as dollar draws bid amid risk-off.
- China's reverse repo rate cut fails to restore risk sentiment and put a bid under the shiny metal.
Gold is entrenched in the negative territory in Asia as the US dollar, the shiny metal's biggest nemesis, is benefitting from the renewed risk aversion in the equity markets.
Gold rejected at $1,638
The yellow metal turned lower from $1,638 in early Asia and is hovering at session lows near $1,614 per ounce at press time, representing a 0.75% decline on the day.
Meanwhile, the futures tied to the S&P 500 are down 0.75% and stocks in Asia are also flashing red. The equities have come under pressure as the coronavirus outbreak gathered pace in the US over the weekend. Stocks put on a good show last week, possibly on the back of the fiscal and monetary stimulus lifelines provided by the US and other nations across the globe.
While the renewed risk-off tone is boding well for the traditional safe-haven currencies like the Japanese yen, gold is struggling, possibly due to the strength in the greenback. The dollar index, which tracks the value of the US currency against majors, is currently seen at 98.73, up 0.42% on the day.
The American dollar is again pushing higher against risk currencies amid anti-risk action in the equity markets and could continue to gain altitude in the near-term, according to Goldman Sachs.
In the West, the economic fallout from the virus outbreak has just begun and a decline in the equities looks inevitable, said Goldman Sachs analysts.
It's worth noting that China cut reverse repo rates by 20 basis points early Monday and infused $7 billion liquidity into the banking system. That too has so far failed to put a bid under gold and risky assets.
Technical levels
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