Price of Gold Fundamental Daily Forecast – Threat of Global Recession Driving Prices Higher

Gold futures hit its highest level in seven years on Friday as the spread of the coronavirus raised fears about its impact on the global economy. These concerns are driving investors into the safe-haven Treasurys and the U.S. Dollar. Recent dovish comments from major central banks and stimulus measures from several Asia countries are helping to drive up gold’s appeal as an alternative investment.

At 12:31 GMT, April Comex gold is trading $1636.30, up $15.80 or +0.98%.

Gold prices have risen about 3% so far this week and are set to record their biggest weekly percentage gain since early August. The rally suggests that risk is off with money moving out of the higher-yielding equity markets and into Treasury bonds and gold. The benchmark 10-year U.S. Treasury yields fell to its lowest level since September.

IMF:  Too Early for Accurate Figures on Coronavirus Impact on Global Growth

It is premature to give precise projections of economic growth in China and the World in 2020 following the outbreak of coronavirus, IMF Managing Director Kristalina Georgieva said on Thursday.

The IMF is still reviewing its projections for growth in China while looking at the impact of the epidemic on the global economy, Georgieva told a news conference in Morocco’s capital Rabat, where she discussed preparations for IMF and World Bank Group meetings to be held in October 2021 in Marrakech.

The IMF said last month global growth is projected to rise from an estimated 2.9% in 2019 to 3.3% in 2020 and 3.4% in 2021.

“We are still hoping that the impact will be a V-shaped curve” with a sharp decline in China and sharp rebound after the containment of the virus, she said. “But we are not excluding that it might turn to be a different scenario like a U curve where the impact is somewhat longer.”

Some Asia Countries on Brink of Recession

Japan and Singapore are on the brink of recession and South Korea on Friday said its exports to China slumped in the first 20 days of February as the outbreak upends global supply chains.

Factories in China, Southeast Asia’s largest trading partner, have struggled to return to work as authorities ramp up containment efforts, with officials saying that January and February exports and imports will be hit by the outbreak that has claimed more than 2,200 lives.

“Data suggests that a pickup in activity is still elusive, which could have negative implications on global growth,” DBS Group Research said in a note.

Daily Forecast

The fundamentals are bullish so any price corrections will be technically driven. Furthermore, even in the greatest of bull markets, investors take profits. The spread of the coronavirus is likely to continue to underpin prices because we still don’t know the duration of the virus and how much it will affect the global economy.