Gold justifies Thursday’s Doji, risk reset with pullback moves to $1,572

Gold prices decline to $1,572.85, with an intra-day low of $1,571.04, amid the early Friday trading. The yellow metal recently took clues from the WHO and Chinese efforts, followed by China PMI, to consolidate gains. However, coronavirus fears keep the trade sentiment under pressure.

Despite terming coronavirus an international health emergency, the World Health Organization (WHO) stayed cautiously optimistic and refrained from entertaining any travel/trade ban with China. Following that, China’s envoy to the UN and Foreign Ministry spokeswoman also tried to sound as positive as possible.

Also increasing the strength of risk reset were China’s official PMIs that failed to disappoint as feared.

Even so, the epidemic has claimed more than 200 lives in China and infected around 8,000, not to forget nearly 100 cases outside the national border. This makes it a more serious case than SARS that plagued in 2002/03.

That said, the market’s risk barometers, namely the US 10-year treasury yields and S&P 500 Futures, are currently flashing mixed signals. While the US yields recover from the 16-week low to 1.582%, S&P 500 Futures remain mostly unchanged to 3,290.

Investors will now keep eyes on the global economic calendar that has multiple key data from Eurozone, Canada and the US. It should, however, be noted that coronavirus updates are likely to remain as the main catalyst for the markets.

Technical Analysis

With the candlestick formation favoring the bullion’s trend reversal, sellers will look for entry below a four-week-old support line near $1,564. On the upside, prices need to clear $1,587/88 barrier to aim for $1,600.