Gold Price Close to Two Week Highs on Coronavirus Uncertainty
Gold price started the week 0.15% lower at 1581.03 as the precious metal consolidates close to two-week highs. Investors are trying to access the coronavirus impact on the global economy amid confusing signals out of China and a rising number of cases and deaths. Hubei province the epicentre of the virus confirmed 1,933 new cases of coronavirus and 100 new deaths as of February 16. The central bank of China in an attempt to ease the economic impact injected 200 billion yuan liquidity via 1-year medium-term lending facility. PBOC also cut the rate on MLF to 3.15%, from 3.25%.
I expect gold physical demand to be a victim of the coronavirus in China but the uncertainty around the coronavirus impact still supports the gold as a safe haven asset.
Gold price continues to attract bids on coronavirus uncertainty and a bullish outlook that formed since the beginning of the year. Gold hit the yearly high at $1600 on tensions between Iran and U.S. and retreated back to $1530 region before the outbreak of the coronavirus. The technical outlook is positive for gold (XAUUSD) as the price trades above all significant daily moving averages.
On the downside, initial support stands at $1578.9888 the daily low. Next support for gold would be met at 1566 the low from February 13th. If gold price breaks below that level bears will target the low from February 5th low at $1,547.
On the other side, first resistance for gold price stands at $1583.83 the daily top. A break above would open the way for the next resistance at $1593 the high from February 3rd. More offers might emerge at 1611 the high from January 8th.