Gold pulls back from 18-day top to $1,584 despite fears of coronavirus outbreak
- Gold prices stay near multi-day high amid downside risks emanating from China.
- Coronavirus outbreak claimed many lives off-late, H5N1 to join the league soon.
- Markets in China open after an extended Lunar New Year holiday period.
Gold prices decline from more than three-weeks low to $1,584 during the Asian session on Monday. The yellow metal initially benefited from the market’s risk-off due to coronavirus outbreak fears. However, the recently recovered data from Japan and Australia, coupled with the Chinese government’s measures to tame the sell-off after long holidays, might have triggered the profit-booking.
China’s coronavirus has so far infected 14,557 people across the globe, mostly from Beijing, as per the World Health Organization (WHO) data. Adding to that, Reuters reports the global death toll of 350 following 56 new coronavirus deaths in Hubei. Even so, Vice Governor of Hubei Province, where the virus originated, conveyed his worries by saying that the coronavirus is still severe and complicated.
Most of the global economies have cut their travels to and from China while the American Airlines’ group recently banned the foreign nationals who have visited Beijing in the last 14 days.
China’s government has already taken steps to disappoint the bears during their first trading day after January 23, amid fears of an epidemic. These include infusion of further liquidity, loan supports to organizations affected due to the contagion and advising brokers to ban the short-selling.
Even so, the risk of fatal disease has previously dragged the US 10-year treasury yields and S&P 500 Futures. Though, the latest data from Japan and Australia might have helped questioned the bears.
In addition to Australia’s Commonwealth Bank Manufacturing PMI, TD Securities Inflation, Building Permits and ANZ Job Advertisements have also managed to smash the pessimism spread through the early-day release of AiG Performance of Mfg Index. On the other hand, Japan’s Jibun Bank Manufacturing PMI for January slipped below 49.3 forecasts and prior to 48.8.
Traders may now eye on China’s January month Caixin Manufacturing PMI, followed by the US activity data, for fresh clues. Also in the spotlight will be Brexit headlines as the UK has formally left the EU and will now be on the negotiation table for future trade ties.
Technical Analysis
Unless providing a daily closing below 21-day SMA level of $1,564, prices are not likely to revisit the previous month's low near $1,518.
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.
