Spot gold was trading at $1, 670.80 an ounce on Friday morning in Asia. Gold prices rose further on the day, taking a firm hold at $1,670 before rising further. It hit an intraday high of $1,676.37 an ounce and is now down from that high.
Gold surged more than 2 percent to its highest level in more than a week on Thursday as fears of a global outbreak of a new coronavirus spurred haven inflows and raised hopes of further monetary easing by major central banks.
Meanwhile, COMEX April gold futures closed up $25.0, or 1.5 percent, at $1,668.0 an ounce.
Gold got a boost from a sharp drop in the overnight dollar index to a near two-month low of 96.51, the yield on the 10-year Treasury note fell below 1 percent, and now the yield on the 30-year Treasury note is at a record low below 1.5 percent.
A recent article on Economies.com, a leading financial news website, said gold’s strong rebound overnight, trading around $1,665.00 an ounce, has strengthened expectations that the bullish trend will continue for some time to come. In this case, the way is open for gold to reach its target of $1689.33 an ounce. Wait for gold to rise further, and unless it falls below $1,633.60 an ounce and stays below that level, the bullish call will remain valid.
Michael Matousek, chief trader at US Global Investors, believes the market is now in a consolidation phase after pricing in this week’s emergency fed rate cut. The global negative/low-interest rate environment and the prospect of more negative rates to come due to the outbreak have led investors to add gold to their allocations.
“The stock market is clearly under pressure, and the coronavirus concerns are increasing, so we’re clearly seeing a flight from riskier assets into safe-haven assets like gold,” said David Meger, director of metals trading at High Ridge Futures. Moreover, we still see gold as a classic hedge against the flood of central bank liquidity. Gold continues to be the trendsetter and continues to be our favorite alternative investment.”
“The macro argument for gold is simple,” Edward Moya, senior market analyst at broker OANDA, said in a note. The impact of this virus on global growth and low global interest rates will continue to push gold higher.”
Todd Horwitz, chief market strategist at BubbaTrading.com, wrote that gold is trying to rebound while silver and platinum continue to struggle. Silver and platinum come in two distinct forms, both of which will eventually appear at lower prices. Platinum prices peaked in January and have been falling ever since. The pattern has been steadily declining, with a few big drops in between, but basically a steady downward trend.
Horwitz points out that silver, which hit a double peak a few weeks ago, has fluctuated sharply in both directions, but is still skewed to the downside. The rally we’ve seen in recent days is just another selling opportunity. Two metals, two patterns, but both in the same direction. Still bullish gold, bearish silver and platinum.
Hareesh V, head of institutional commodities research at Geojit Financial Services, said the current outbreak had spread to nearly 80 countries and the sense of crisis was growing, with investors uncertain about what would happen next and predicting a preference for gold.
For the rest of the day, investors will be closely watching Friday’s nonfarm payrolls report for signs that the coronavirus is having a negative impact on the labor market.
At 21:30 Beijing time on Friday, the United States will release its non-farm payrolls report for February. A media survey showed U.S. nonfarm payrolls are expected to have increased by 175,000 in February, well below the 225,000 increase previously reported.
In addition, the expected U.S. unemployment rate for February was unchanged at 3.6 percent.
Investors also look at salary data. Average U.S. hourly wages are expected to rise 0.3 percent in February and climb 3.0 percent at an annual rate, the survey showed.
If the non-farm data falls short of expectations, the dollar will suffer, gold will get a boost and rally further, and vice versa.