Price of Gold Fundamental Daily Forecast – Demand for Risk Weighing on Prices

Gold futures are trading lower after giving up earlier gains that drove the market to its highest level in nearly four weeks. Ahead of the weekend, investors bought gold in anticipation of a possibly global stock market crash fueled by a sharply lower opening in China.

However, this didn’t happen as China took steps to protect its economy from the impact of the coronavirus epidemic, encouraging investors to trim their safe-haven asset positions.

At 13:18 GMT, April Comex gold is trading $1581.70, down $6.20 or -0.38%.

Mixed Signals in Global Equity Markets

Stocks in mainland China plummeted more than 7% on Monday as they returned to trade following an extended holiday amid an ongoing coronavirus outbreak.

Meanwhile, European markets inched higher as investors appeared to brush off concerns over the U.K.’s departure from the EU, which took place last Friday, and the latest coronavirus developments.

U.S. stock index futures pointed to a higher open on Monday as Wall Street tried to regain its footing after coronavirus fears sparked a steep sell-off to close out January.

People’s Bank of China Injects Liquidity

In an effort to slow the price slide and restore confidence in the markets and the economy, the PBOC injected 1.2 trillion yuan ($173.81 billion) into money markets through reverse bond purchase agreements, the largest such move since 2004, according to DBS analysts.

It also unexpectedly cut the interest rate on those short-term funding facilities by 10 basis points.

Furthermore, the chance of a benchmark lending rate cut on February 20, the date of its next monthly fixing, has significantly increased, central bank advisor Ma Jun said.

In addition to the stimulus, China’s securities regulator moved to limit short selling and urged mutual fund managers not to sell shares unless they face investor redemptions, sources told Reuters.

Daily Forecast

Gold is likely to remain under pressure as long as U.S. equity markets remain positive.

In the meantime, investors will get the opportunity to react to the latest U.S. economic data on ISM Manufacturing PMI. It is expected to come in at 48.5. A lower number could trigger an intraday rally in gold.

Construction Spending is expected to come in at 0.5%, down slightly from the previously reported 0.65.