Gold has advanced in tandem with rising fears over the impact of the coronavirus outbreak. Coronavirus has weighed on economic growth forecasts and stock prices alike in recent weeks, leaving investors in search of havens for gains.
Today news that the number of coronavirus cases in South Korea doubled and that two died onboard the Diamond Princess cruise ship rocked investor nerves. China posting a sharp drop in the number of new cases failed to ease fears, partly because of another change in diagnostic criteria which is creating a level of distrust surrounding the figures. China had just 394 new cases on Wednesday, down from 1749 the previous day. The total number of confirmed cases is at 74,576.
Levels to watch
Gold is trading at a 7 year high, up 0.6% today. It trades comfortably above its 50, 100 & 200 sma on the daily chart, with bullish momentum firmly intact. A break below the trend line around $1590 could negate the bullish trend, otherwise gold could advance towards $1650 (round number) and $1685 (high Feb 2013)
Immediate support can be seen at $1603 (today’s low) prior to $1580 (low 18th Feb & trend line support). This could open the doors to $1550 (low 4th Feb & trend line support).