Gold remains under pressure near two-week low amid broad risk recovery
- Gold prices extend losses while nearing multi-day bottom flashed the previous day.
- Upbeat data from the key economies, China’s efforts to placate investors keep the risk-tone light.
- Coronavirus news, the economic data will be the key catalysts.
Gold prices stay on the back foot while taking rounds to $1,553 during the Asian session on Wednesday. The yellow metal witnessed heavy declines the previous day as markets turn cautiously optimistic following welcome data from the key economies and China’s active efforts to placate the investors. Even so, the coronavirus outbreak continues, which in turn highlights the importance of updates as well as economic data for further direction.
While the RBA’s surprise optimism pleased markets on early Tuesday, welcome data points from the UK, EU and the US, later on, spread the optimism during the previous day. Recently, New Zealand’s Q4 employment numbers flashed mixed signs but a drop in the Unemployment Rate helps the Kiwi remain mostly positive.
On the other hand, coronavirus continues to challenge the Chinese authorities as the epicenter Hubei province recently added 3,156 cases of infected people, making the count as 16,678.
Read: Coronavirus update: Hubei reports 65 new deaths, Ecuador announces its first case
Even so, the market’s risk-tone remains positive as China’s urge to investors to not panic follows its liquidity infusion and positive Caixin Manufacturing PMI data. Also supporting the risk sentiment could Iowa Caucus results where Republicans are leading the race.
While portraying the trade sentiment, the US 10-year treasury yields rose eight basis points (bps) to 1.60% and Wall Street also registered gains by the end of Tuesday’s session. However, S&P 500 Futures register no major change to 3,299 by the press time.
Today’s economic calendar has some more of the PMI data to keep traders busy. Also likely to entertain investors will be the news/updates concerning coronavirus and developments from Iowa.
Gold prices have closed below 21-day SMA for the first time in a year, which in turn can help sellers target mid-January lows surrounding $1,536 during the further declines. Alternatively, the bullion’s recovery beyond the immediate SMA level of $1,563 may have to clear $1,571 to validate its short-term strength.