Gold: Firm around two-week top beyond $1580 as risk-off continues
- Gold remains modestly positive amid broad risk aversion.
- China’s coronavirus, fears of hard Brexit keep the risk-off intact.
- The US market’s off, a lack of major data could confine the moves.
Gold prices stay mildly positive, +0.08%, to $1,583.84 during the early Asian session on Monday. The yellow metal remains on the front foot amid the market’s fears emanating from China’s coronavirus. The latest Brexit-negative headlines also contribute to the risk aversion.
China tries it all to tame coronavirus implications…
Be it more than 300 billion Chinese yuan liquidity infusion or announcing corporate tax cuts and an increase in fiscal spending, the diplomats in China are trying from all corners to placate markets. However, they have been less successful so far.
The latest action comes from the General Administration of Customs (GAC) that speeded up inspection of imported manufacturing equipment and simplifying the quarantine approval procedures for foreign medical goods.
Even so, the increasing toll of the coronavirus fears the markets. The total number of infected people from the deadly disease crossed 68,500, with a death toll rising to 1,665, on February 15.
As a result, the US 10-year treasury yield and the German bunds remain on the back foot. However, global equities seem to portray the mixed signs amid upbeat signals from the US.
Brexit also contributed to the risk aversion…
In addition to the Chinese epidemic, fears of a no-deal Brexit also contribute their part to the markets’ risk aversion. With the Tories at the helm, the European Union (EU) leaders aren’t finding themselves in a comfortable position while heading into the Brexit trade deal talks up for early March.
The recent headlines from The Telegraph and The Guardian suggest that there will be a tough start to the talks considering the differences between the two ex-neighbors.
Although risk aversion will keep the yellow metal on the bulls’ radars, an absence of the US traders could give rise to a dull trading session. However, the preliminary reading of Japan’s fourth quarter (Q4) GDP, expected -0.9% versus +0.4% prior, can offer immediate direction to the bullion.
Technical Analysis
A downward sloping trend line since January 08, around $1,585 now, can restrict the precious metal’s near-term upside. However, an eight-day-old rising trend line, currently at $1,570, could challenge intra-day sellers.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
