The gold price jumped higher above the 1600 mark as the negative impact from the coronavirus outbreak starts to bite. The revenue warning from Apple was the first signal that the virus will impact the global economy. Meanwhile the coronavirus death toll has surpassed 2000 while there are over 74000 confirmed cases. China reported today 1,749 new confirmed infections and 136 additional deaths.
The precious metal as of writing is 0.43% higher at $1608.32 despite an improvement in investors sentiment after the PBOC is taking all appropriate measures to limit the negative impact of the coronavirus crisis.
Uncertainty and disruptions in the supply chain is gold positive as shift traders to safe haven assets. A drop in the number of new cases might drive investors away from gold.
Gold price approaches the January highs at $1611. The gold rally accelerated yesterday after the price breached above the $1600 mark. Bulls will be in control as long as the gold price stays above $1600.
On the upside, first resistance for gold price stands at $1609.60 the daily top. A break above might test next resistance at $1611 the high from January 8th. A warning signal for the longs is that the price have reached overbought level. The RSI 14 is at 70.01
On the flip side, initial support for gold stands at $1599.65 the daily low. The next support for the gold would be met at $1583 the low from yesterday’s trading session. If the gold price breach below, bears will target the low from February 13th at $1,566.