Gold kick-starts the week with bullish gap-up to $1589 as coronavirus fuels risk aversion

Gold prices remain positive while taking rounds to $1,583, following the intra-day high of $1588.70 flashed at the week’s start, amid Monday’s Asian trading session. The yellow metal recently benefited from fears of China’s coronavirus outbreak while worries headlines from the Middle East as well as concerning the global trade add to the risk aversion.

Fears of coronavirus outbreak, US-Iran tension and fresh trade war dominate…

As per the latest update, the coronavirus death toll rises to at least 80 from 56 communicated earlier. The fatal virus has so far affected more than 2,000 people in China as per the official statements whereas unofficial claims rise to as high as 90,000 being infected. Outside China, the US registered fifth case whereas Sydney and Japan are also in the list of affected.

Chinese authorities seem to witness the black days amid the Lunar New Year holidays, which are extended till February 02. Investors now look towards the World Health Organization’s (WHO) response to the latest spread in virus infection as the global entity previously waited for more clues before terming the issue as an international emergency.

Elsewhere, the US embassy in Iraq witnessed another rocket attack on early Monday in Asia. While the government in Tehran opposes such attacks on the international troops, there is still no sign of action and the same could push the US to renew fears of the US-Iran war.

Also contributing to the market’s risk aversion is the Bloomberg news that the Trump administration extended its benchmark aluminum and steel tariffs to some other imported items.

With this, the US 10-year treasury yields drop the lowest from October 09 to 1.63% whereas the S&P 500 decline more than 1.0% to 3,258 by the press time.

The off in Australia and no major data/events on the Asian economic calendar will keep global investors stick to risk news for fresh direction.

Technical Analysis

Gold prices need to stay strong beyond $1,589 to aim for $1,600 and the monthly top surrounding $1,612, failing to do so can recall a 21-day SMA level of 1,5555 back to the charts.