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Price of Gold Fundamental Daily Forecast – Likely to be Bid as Coronavirus Fears Intensify

By:
James Hyerczyk
Updated: Jan 27, 2020, 17:45 UTC

With an incubation period for the virus of up to two weeks, the lockdowns in China could last for several weeks. This could put a negative impact on the major financial markets, while driving investors into gold for protection.

Price of Gold Fundamental Daily Forecast – Likely to be Bid as Coronavirus Fears Intensify

Gold prices are trading steady at the mid-session on Monday. The market is being supported by a drop in U.S. Treasury yields and lower demand for risky assets. Earlier in the session, gold jumped 1% to a near-three-week high as growing concerns that the coronavirus outbreak could impact the global economy drove investors into gold for protection.

At 15:44 GMT, April Comex gold is trading $1587.20, up $9.00 or +0.57%.

Essentially, risk aversion is pushing gold prices higher. Over the weekend, the news showed the coronavirus was spreading globally and the death toll in China was rising. This encouraged investors to dump risky assets on the notion the spread of the disease would lead to a global economic slowdown.

The U.S. Dollar rose to near a two-month high on Monday as investors sought protection in the safe-haven currencies. The move dampened demand for dollar-denominated gold, helping to cap gains.  A drop in U.S. 10-year Treasury yields to a three month low, helped underpin gold prices.

US New Home Sales Dip in December

U.S. sales of new built homes fell 0.4% in December, cooling slightly after low mortgage rates fueled gains for much of 2019.

The Commerce Department said Monday that new single-family houses sold at a seasonally adjusted annual rate of 694,000 last month. But for all of 2019, sales climbed 10.3% to 681,000, the highest total since 2007 when 776,000 new homes sold as the housing bubble was beginning to deflate ahead of the Great Recession.

Daily Forecast

With an incubation period for the virus of up to two weeks, the lockdowns in China could last for several weeks. This could put a negative impact on the major financial markets, while driving investors into gold for protection.

Investors are also starting to prepare for the U.S. Federal Reserve’s first policy meeting of this year on January 28-29. The Fed is widely expected to keep interest rates and monetary policy unchanged.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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