- Gold struggles to find demand despite risk aversion on Wednesday.
- US Dollar Index jumps above 97.00 in American session.
- Wall Street’s main indexes fall sharply on coronavirus fears.
The troy ounce of the precious metal rose to its highest level since September of 2012 at $1,779.45 on Wednesday but turned south in the second half of the day. As of writing, the XAU/USD pair was down 0.18% on a daily basis at $1,765.
Coronavirus fears hit financial markets
The intensifying flight-to-safety during the American trading hours provided a boost to the greenback. The US Dollar Index, which tracks the USD’s performance against a basket of six major currencies, jumped above 97.00 to reflect the broad-based USD strength. Meanwhile, major equity indexes in the US are down between 2.1% and 2.7%.
The surging number of confirmed coronavirus infections in the US, especially California, Florida and Texas, is seen as the primary catalyst behind the souring market sentiment on Wednesday.
Despite the modest daily drop, however, gold could also capitalize on risk-off flows as a safe-haven.
Assessing the yellow metal’s outlook, “given that the US and global economy will be operating at below potential, and large scale business closures and the reversal of some aspects of globalization persist for years post-COVID, it is likely that uber accommodative monetary and fiscal policy will remain along with elevated inflation for a prolonged period,” said TD Securities analysts. “These factors can carry gold north of $1,800/oz in the near-term and eventually above $2,000/oz.”
Technical levels to watch for
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