Gold investment: overnight U.S. stocks surge nearly 1300! Is rate cuts the best “vaccine”? Is gold on the verge of a big rally?

Spot gold continued to wobble around the 1600 mark in Asian trading on Tuesday, surging more than $10 on the day as fears of a spreading global epidemic sparked strong expectations of central bank interest rate cuts.

According to the New York Times said, citing U.S. health officials say as of Tuesday night, new crown virus infection cases in the United States has reached 100 cases, including 6 cases of deaths, all in the northwest Washington state, and according to the health sector to infection cases, genetic analysis shows that the new crown virus found in Washington announced at least 6 weeks before the first cases of infection has been spread in the local community.

While the spread of the disease around the world continued to support gold prices, expectations of central bank rate cuts sparked a more adventurous mood, with U.S. stocks rallying sharply on Monday amid hopes the federal reserve would cut rates to support the economy after its worst week since the 2008 financial crisis.

At the close, the dow jones industrial average rose 1293.96 points, or 5.09 percent, to 26,703.32. The NASDAQ rose 384.80 points, or 4.49 percent, to 8952.16; The s&p 500 rose 136.01 points, or 4.60 percent, to 3090.23.

On Friday, fed chairman colin Powell said the fed would “take appropriate action” to support the economy. Earlier on Monday, bank of Japan governor haruhiko kuroda said he would “try to stabilize” markets rattled by the virus scare. The bank of England said on Monday it was working with international partners and the Treasury to ensure “all necessary measures are taken” to mitigate the economic impact of the outbreak.

According to CME Group’s FedWatch tool, traders put the odds of a 50 basis point cut at the fed’s March meeting at 100 percent.

Rising expectations of interest rate cuts are also bullish for gold. “We’re seeing a slight rebound since the end of last week when there was a lot of selling to cash out and cover margin,” said Ryan McKay, commodity strategist at TD securities. “Expectations of fed rate cuts and other global central bank rate cuts are very high and very well supported.”

Stephen Innes, the chief market strategist at AxiCorp in New York, said Friday’s fed signal that it would cut interest rates was good news for gold.

Nicky Shiels, the commodities strategist at Scotiabank, thinks gold has further to go. The bank raised its forecast for gold prices this year to $1,750 an ounce, for a full-year average of $1,625, up about 1.5% from its previous forecast. In the medium to long term, a rise to $1,900 an ounce is not out of the question, Shiels said.

In addition, the international monetary fund (IMF) and the world bank said in a joint statement, ready to assist member states to deal with the outbreak of public health and economic challenges, the IMF and the world bank will be as much as possible, using the emergency financing, policy advice and technical assistance to help countries affected by the epidemic, especially pay attention to the health system is the most weak and influence the people most vulnerable to the poorest countries.

Technical analysis:

The dollar

On the daily chart, the dollar index hit its lowest level in a month and a half at 97.17, edging closer to the 97 mark, and now hovers around 97.55, below all major averages, on expectations of a rate cut. Technically, the MACD green kinetic energy column expanded sharply, the RSI index and the KDJ random index both hit oversold levels, and we are concerned about the possibility of an oversold rebound.

On the 4-hour chart, the dollar index has fallen particularly sharply. It has lost all of its major moving averages and bears have taken the lead. The MACD green momentum has begun to weaken somewhat.

gold

On the daily chart, gold is hovering around the 1600 mark as it tries to rebound from Friday’s near $50 plunge, focused on holding its own. Technically, the MACD green kinetic energy column continues to expand, the RSI index hovers around 50, the KDJ random index falls below 50, and the short-term trend may continue to oscillate.

On the 4-hour chart, gold has pulled up slightly after a previous plunge and is now wound around the 200-day moving average, with short-term pressure above the 100-day moving average around 1605. Technically, the MACD green kinetic energy column continued to weaken, and the KDJ random index rose to break the 50 level, focusing on whether the 100-phase moving average resistance could be broken.

Fundamentals favorable factors:

  1. A former adviser to Iranian foreign minister mohammad javad zarif and a senior Iranian politician, hussain shaikh Islam, has been diagnosed with the new coronavirus, according to al arabiya television on March 3. Sheikh Islam was a senior adviser to the Iranian foreign minister mohammad javad zarif and previously served as Tehran’s ambassador to Syria.

2. South Korea has confirmed 477 new cases of the coronavirus, bringing the total number of infections to 4,812 and 29 deaths, according to the country’s health ministry. A total of 600 new cases were reported on Tuesday.

3. The organization for economic co-operation and development warned on Monday that the outbreak of the coronavirus was dragging the world economy into its worst growth slowdown since the global financial crisis, urging governments and central Banks to take steps to avert a deeper recession.

4. National economic adviser Jeffrey kudlow and Treasury secretary Steven mnuchin supported the fed’s emergency rate cut. US President Donald trump’s team is weighing a response to the new coronavirus to contain its impact on the economy.

5. Local health officials say at least four new cases of pneumonia have died in Washington state, bringing the U.S. death toll to at least six, as the coronavirus that is spreading through communities near Seattle.

Fundamental negative factors:

  1. The organization understands concerns about whether the current 2019 coronavirus outbreak constitutes a global epidemic, tandersey said again. ‘who is monitoring and analyzing the situation and data all the time,’ he said. If there is evidence that the outbreak has become a global pandemic, who will not hesitate to define it as a pandemic, but it now needs to be seen in a different light.
  2. The managing directors of the international monetary fund and the world bank said in a joint statement on Monday that they stand ready to help member states deal with the human tragedy and economic challenges posed by the coronavirus outbreak in 2019.

3.Haruhiko kuroda, governor of the bank of Japan, also helped calm nerves on Monday March 2 by saying the central bank would take necessary steps to stabilize financial markets.

4.According to the announcement of hubei provincial health and fitness commission on March 2, there were 196 new cases of coronary pneumonia in the province from 0 to 24 o ‘clock on March 1, 2020, including 193 cases in wuhan, 2 cases in jingmen city, 1 case in jingzhou city, and 0 cases in the other 14 cities and states.

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