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Price of gold fundamental daily forecast - low demand as fears of coronavirus contagion subside

Commentaries & Views

Concerns the coronavirus outbreak could hinder the global economy persist, but this doesn’t seem to be rattling stock market investors or gold speculators.

Gold futures are trading mixed on Tuesday and inside yesterday’s range. The price action tends to indicate investor indecision and impending volatility. Traders are still monitoring the outbreak of the coronavirus in China, but may be starting to realize the incident is a local problem. This will likely wreak havoc on China’s economy, but may have a limited impact on the global economy.

At 11:52 GMT, April Comex gold is trading $1584.40, up $0.70 or +0.05%.

Prices are see-sawing on Tuesday, but still hovering near a three-week high as European and U.S. equities regained some ground. The slight increase in demand for risk is helping to put a lid on gold prices, while steady to lower Treasury yields remain supportive for the precious metal.

“The flight to safety is not continuing today. Equity markets have stabilized, European equities are broadly flat, so the wave of risk aversion that swept across the financial markets seems to be off,” said Julius Baer analyst Carsten Menke.

“Fears over the Wuhan virus have driven the rally (in gold), but it appears that investors much prefer the safety of high-grade government bonds to the yellow metal,” Jeffrey Halley, senior market analyst, OANDA, said in a note.

US Economic News

At 13:30 GMT, traders will get the opportunity to react to the latest reports on U.S. Core Durable Goods Orders and Durable Goods Orders. Traders are looking for readings of 0.4% and 1.2% respectively.

At 14:00 GMT, the S&P/CS Composite-20 HPI is expected to come in at 2.5%, up from 2.2%.

At 15:00 GMT, Conference Board Consumer Confidence is expected to come in at 128.2, up from 126.5 and the Richmond Manufacturing Index is expected to come in at minus 3 versus the previously reported minus 5.

Investors are likely to closely monitor the Federal Reserve’s first meeting of the year on Tuesday. Fed Fund futures show traders expect the U.S. central bank to keep interest rates unchanged.

Daily Forecast

Concerns the coronavirus outbreak could hinder the global economy persist, but this doesn’t seem to be rattling stock market investors or gold speculators.

The spreading virus also seems to be affecting areas of the world and the financial markets differently. The decline in crude oil, for example, suggests China will get hit by a major slowdown in economic activity.

Gold looks as if it will have a hard time rallying due to safe-haven demand unless the World Health Organization (WHO) declares the coronavirus outbreak a “global emergency”.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.