Price of Gold Fundamental Daily Forecast – Stock Market Hedge Buying Driving Prices Higher

Gold futures are trading higher on Thursday as investors continue to make precautionary moves over mounting concerns over the coronavirus and its impact on the global economy. Traders are shrugging off the sharp rise in global equity markets fueled by the injection of liquidity into the markets by China, and the potential positive impact of China’s halving of tariffs on some U.S. goods.

At 13:12 GMT, April Comex gold is trading $1570.30, up $7.50 or +0.49%.

Gold traders are interpreting the tariff cut to mean China is becoming more concerned about its economy, businesses and GDP.

China on Thursday said it would halve additional tariffs levied against 1,717 U.S. goods last year.

Retaliatory duties on some U.S. goods will be cut from 10% to 5%, and from 5% to 2.5% on others, according to a statement from China’s Ministry of Finance. The adjustments will take effect from 1:01 p.m. on February 14, it said, without specifying which time zone it was referring to.

The statement said the move was made in order to “advance the healthy and stable development of China-U.S. trade.”

China said that the next adjustment will depend on how Sino-U.S. trade times evolve, adding it hopes to work with Washington to completely eliminate all tariff increases.

Coronavirus Cure Confusion

The stock markets are being supported by unconfirmed reports of breakthroughs in the development of a drug for the disease and liquidity, but gold traders don’t seem to believe the news. The price action suggests they are pricing in worsening conditions.

Demand for risk is increasing as stories claiming health experts are close to a cure are hitting the newswires. However, the World Health Organization on Wednesday played down reports of “breakthrough” drugs being discovered to treat people infected with the new virus.

Daily Forecast

The price behavior suggests investors are buying stocks, but at the same time buying gold as a hedge against a potential top in the stock market.

Gold could actually continue to rise along with stocks as investors raise their levels of protection.

Economic data ahead of Friday’s U.S. Non-Farm Payrolls report could also influence gold prices today if they have an impact on interest rates and the U.S. Dollar.

These reports include Preliminary Nonfarm Productivity, Preliminary Unit Labor Costs, and Weekly Unemployment Claims.

Earlier today, a U.S. Job Cut Report surged to its highest level in 11 months. Challenger Gray said job cuts announced by U.S. based-employers jumped 106%.