Spot gold remained strong in early Asian trading on Wednesday, holding above the $1, 600 / oz mark after a quick rally to near $1, 605. Analysts pointed to a sharp rise in gold prices after an unexpected warning from apple about the impact of the new coronavirus led to a sell-off in U.S. stocks overnight and increased risk aversion. In the early hours of Thursday Beijing time, the U.S. dollar could take a hit and gold could rise further if fed minutes are released with dovish language.
The latest announcement of the national health and fitness commission: 1,749 new cases, a total of 74,185 confirmed cases
According to the national WeiJianWei updates on Wednesday, February 18, 0-24, 31 provinces (autonomous regions and municipalities directly under the central government) and the xinjiang production and construction corps report 1749 cases of the new cases, 236 cases of serious illness case of illness, new new death cases, 136 cases (132 cases of hubei province, heilongjiang, shandong, guangdong, guizhou, 1 case), 1185 cases of new suspected cases.
On the same day, 1,824 new cases were cured and discharged from hospital, and 2,014 close contacts were released for medical observation.
As of 24:00 on February 18, according to reports from 31 provinces (autonomous regions and municipalities directly under the central government) and the xinjiang production and construction corps, there were 57,805 confirmed cases (including 11,977 severe cases), 14,376 cured and discharged from hospital, 4,004 deaths, a total of 74,185 confirmed cases and 5248 suspected cases. A total of 574,418 close contacts were traced, and 135,881 close contacts were under medical observation.
Gold price explosion
Gold bulls erupted on Tuesday, sending prices soaring more than 1 percent to above $1,600 an ounce. U.S. stocks sold off as apple inc. ‘s unexpected warning about its exposure to the new Coronado virus heightened concerns about global economic weakness, prompting investors to turn to gold as a safe-haven asset, analysts said.
Spot gold remained strong Wednesday morning, hitting as high as $1,604.70 an ounce.
Apple, the world’s most valuable technology company by market capitalization, said it was unlikely to meet its march quarter sales forecast because of pressure on its supply chain from the coronavirus outbreak.
In a statement to investors, Apple said that while its Chinese production facilities had resumed, the acceleration in production had been slower than expected. That means fewer iPhones are available for sale globally. Apple said supply of iPhones would be “temporarily limited” because manufacturing facilities in China were still operating below capacity.
The surprise sales warning took world stock markets off record highs and prompted investors to buy safe-haven assets.
“Equities are under pressure and gold is still seen as a classic safe haven because we do hear some negative news about the coronavirus and its impact on the global economy,” said David Meger, head of metals trading at High Ridge Futures.
Bart Melek, head of the commodity strategy at TD Securities, said: “The market is starting to price in the fact that there are concerns that the whole coronavirus situation could be a bit worse than many expect, which means central Banks around the world will be somewhat more dovish.”
Gold’s strong rebound through $1,600 an ounce and close to its long-awaited target of $1,611.20 supports expectations of further gains on the day and in the short term, according to Economies.com.
If prices break $1,611.20 an ounce, gold will continue its bullish trend and hit $1,625.00 an ounce, the next major target for gold, Economies.com said. Unless gold falls below $1,575.90 an ounce and stays below that level, bullish expectations will remain in effect.
Kitco data released on Friday showed respondents to its golden week survey were bullish about gold prices in the coming week, saying technical factors and continuing concerns about how coronavirus could affect the global economy would keep gold prices firm even as the dollar and stock markets strengthened.
Fed minutes come in
At 03:00 Beijing time on Thursday, the federal open market committee will release the minutes of its January meeting.
Daniel Ghali, the commodity strategist at TD Securities, said: “we will get the fomc minutes and it will be interesting to watch as always. The theme that the threshold for the fed to raise rates is much higher than the threshold for rate cuts is likely to remain relevant.”
The fed left its benchmark interest rate unchanged at its January policy meeting, citing moderate economic growth and a strong job market.
Federal reserve chairman colin Powell was upbeat about the U.S. economy in congressional testimony last week. Despite the virus threat, Mr. Powell said the fed’s policy was well placed after a series of rate cuts in 2019.
“As long as the latest economic information is broadly consistent with this outlook, the current monetary policy stance is likely to remain appropriate,” he said.
Analysts said the dollar could take a hit if the fed minutes were more dovish, while gold could rise further.