Gold prices consolidate gains to sub-$1,650 area amid risk reset
- Gold probes five-day winning streak.
- Risk positive comments from China, WHO and the US seem to play their role off-late.
- Tokyo open pays a little heed to the coronavirus updates from South Korea and comments from global businesses.
Gold prices decline to $1,649.50, down 0.62%, amid the initial hours of the Asian session on Tuesday. While the risk of spreading coronavirus outside China propelled the bullion to a fresh seven-year high on Monday, the recently mixed headlines seem to trigger the pullback amid risk reset.
Among the key catalysts, China’s lowering of emergency alerts in various provinces and the recent recovery in coronavirus (COVID-19) numbers played the key role. Also challenging the risk-on was the World Health Organization’s (WHO) tweet mentioning the epidemic to have peaked between late-January and early-February. Further to support the sellers were the US President Donald Trump and the Federal Reserve Cleveland President Loretta Mester who downsized the risks emanating from the Chinese virus.
Even so, the US and South Korea have suspended their military exercises whereas the US CDC increased warning levels for the Asian nation as same as China during the early days of coronavirus infection. Additionally, global business players like United Airlines and Mastercard have also flashed warnings due to the outbreak of the Chinese epidemic.
Recently, Japan’s Economy Minister Nishimura said to pay close attention to impact coronavirus including financial markets. It’s worth mentioning that Japanese markets re-open today after a long weekend due to the Emperor’s Birthday. Also, Japan’s Corporate Service Price Index for December rose to 2.3% from 2.1% expected and prior just round the Tokyo open.
That said, the US 10-year treasury yields recover nearly two basis points from the three-year low to 1.394% while S&P 500 Futures also mark 0.55% gains to 3,244 by the press time.
Investors will now pay close attention to the coronavirus updates for fresh impulse while the Asian traders’ reaction, led-by Japan, to the recent risk reset will also be the key.
Technical Analysis
Unless rising back beyond $1690, gold prices are expected to test the resistance-turned-support line stretched from September 2019, at $1,633 now.
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.
