Gold struggles to find acceptance above $1700 mark despite coronavirus-led jitters

Gold refreshed session lows in the last hour, around the $1657 region, albeit lacked any strong follow-through and now seems to have stabilized in the neutral territory.

The precious metal witnessed some intraday profit-taking on Monday and reversed an early uptick to levels beyond the $1700 round-figure mark, or fresh multi-year tops touched in the wake of intensifying global rush into perceived safe-haven assets.

Traders refrained from placing aggressive bets

Growing concerns over the economic impact of the coronavirus outbreak, coupled with a turmoil in the oil markets rattled the financial markets on Monday. This was evident from a sea of red across equity markets and benefitted the precious metal.

Adding to this, firming expectations that the Fed will deliver another 50 bps rate cut on March 18 and collapsing US Treasury bond yields provided an additional boost to the non-yielding yellow metal, lifting it to the highest level since December 2012.

Bulls, however, failed to capitalize on the early uptick, rather opted to take some profits off the table. The fact that policymakers across the globe showed readiness to counter the coronavirus effect seemed to be the only factor behind a modest intraday pullback.

As investors assessed the economic impact of the virus outbreak, the downside is likely to remain cushioned, rather might still be seen as a buying opportunity. That said, the stock market crash might force several funds to liquidate their long positions to fulfil their margin calls, which might act as a key headwind for the commodity.

Hence, it will be prudent to wait for a sustained strength above the $1700 mark before traders again start positioning for any further appreciating move amid absent relevant market moving economic releases from the US.

Technical levels to watch