Spot gold remained moderately positive in early Asian trading on Monday, trading above 1580.
Anil Panchal’s brief analysis of gold’s next move is as follows:
Gold remains the market leader amid concerns about a new coronavirus in China. Recent negative news about brexit has also fuelled risk aversion.
Despite recent efforts by China to soothe the market, the growing number of new cases of coronary pneumonia continues to worry the market. By February 15, more than 68,500 cases had been confirmed and the death toll had risen to 1,665.
As a result, us 10-year yields and German bunds remain at a disadvantage. However, global equity markets appear to be showing mixed signs amid optimism about the us economy.
As well as the Chinese outbreak, fears of a “no-deal Brexit” have also fuelled risk aversion. With the conservatives in power, eu leaders did not find themselves in a comfortable position when negotiating a Brexit trade deal in early March.
Combined with recent news from the telegraph and the guardian, the talks could get off to a rocky start, given the differences between the eu and the UK.
While risk aversion will give gold bulls an edge, the absence of U.S. traders during the day could lead to thin trading. However, news on the China outbreak could provide direction for gold prices.
From a technical perspective, the downtrend line since January 2008, currently around $1,585, could limit gold’s short-term gains. However, the eight-day uptrend line, currently at $1,570, could pose a challenge for intraday shorts.
Support level: 1575.72; 1568.82; 1564.5
Resistance level: 1586.94; 1591.26; 1598.16