Gold: Modestly flat around $1575, trade/coronavirus in the spotlight

Gold prices wait for clues to extend the earlier recovery while taking rounds to $1,575 amid Thursday’s Asian session. The yellow metal recently recovered after the Fed reiterated its dovish stance while worries surrounding China’s coronavirus keep the risk-tone heavy. Also contributing to the risk aversion were trade headlines from the White House.

The US Federal Reserve matched wide market expectations of not altering the current monetary policy, offering Fed Interest Rate within the target range of 1.5% - 1.75% range. However, the US central bank Chairman Jerome Powell cited likely weakness in manufacturing and inflation while staying ready to act if needed.

China’s coronavirus has so far crossed the death toll from the SARS epidemic that feared markets during 2002/03. While adding the latest figures from Hubei, total deaths due to coronavirus, all in China nothing outside, reached 170. This pushes the US White House Adviser Larry Kudlow to signal further restrictions on the US-China airlines after taking the majority of flights down the previous day.

On the trade front, US President Donald Trump’s adviser Peter Navarro sounded harsh during the CNBC interview. The White House adviser failed to sympathize with China’s coronavirus while stating that the US will keep tariffs on China even if coronavirus starts hurting growth.

While portraying the risk-off, the US 10-year treasury yields drop to the fresh low since October 09, 2019. Though, the S&P 500 Futures have recently started recovering, +0.13% to 3,275 by the press time.

Moving on, traders will keep eyes on the economic calendar as it carries the key risk events like monetary policy meeting by the BOE and the preliminary reading of the US fourth quarter (Q4) GDP. Other than that, trade/coronavirus headlines will continue providing intermediate direction to the markets. The forecast suggests that the UK’s central bank will keep interest rates unchanged despite Governor Mark Carney likely being bearish. On the other hand, the US GDP could reprint 2.1% GDP figure on a quarterly basis.

Technical Analysis

An ascending trend line from January 14 and 21-day SMA restrict the bullion’s near-term declines near $1,560 whereas $1,600 holds the key to the further upside.