The gold price retreats today to weekly lows despite the broad risk-off sentiment. Gold is in profit-taking mode ahead of the weekend and amid bets that central banks might take coordinated action to offset the impact of coronavirus. The panic in the markets increases the possibility of more interest rate cuts from the central banks around the globe.
The spread of the virus outside China supports safe-haven assets. In China, the number of new confirmed cases has been on the decline since Monday, but is too soon to say that the coronavirus outbreak has peaked. The risk is still on the upside at least until there are some signs of containment of the virus spread.
I expect gold physical demand to be a victim of the coronavirus as India and China are the biggest markets of gold and face the disruptions from the coronavirus crisis.
Gold price is 1.34% lower at $1622.10 at weekly lows amid profit booking ahead of the weekend. Volatility in the markets drives investors to cash ahead of the weekend. The gold technical outlook is bullish despite today’s unexpected pullback and can be cancelled only if we have some positive news from the coronavirus front.
On the downside, initial support for gold stands at $1622.88 the daily low. The next support will be met at $1603 the low from February 20th. If the gold price breaks below, sellers will target the low from February 18th, at $1,582.
On the other side, the first resistance for gold price stands at $1649.45 the daily top. A credible break above might open the way for the next resistance at $1660 the high from February 27th. In case of a break higher the next hurdle stands at $1689 the nine-year highs.