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  • Gold recovers from multi-day low as risk-tone remain heavy.
  • Coronavirus fears push global central bankers, policymakers towards further easy money steps.
  • China’s Caixin Manufacturing PMI and the US activity data will decorate the economic calendar.
  • COVID-19 remains as the key catalyst.

Gold prices take the bids to an intra-day high near $1,595 during the Asian session on Monday. With that, the bullion recovers Friday’s losses from the lowest since February 12, 2020. Despite its run to the multi-month top during February, the safe-haven recently witnessed pullback as magnified risk-aversion due to coronavirus outbreak pushed traders off from commodities.

As per the latest headlines, the coronavirus (COVID-19) is increasing at a faster pace in the US after marking the first death Seattle during the weekend. Elsewhere, the UK PM also suggested the contagion will increase before slowing whereas numbers from South Korea, Italy and France have also been worrisome. Though, the COVID-19 numbers from China keep declining.

While portraying the risk-off, the US 10-year treasury yields drop to the fresh record low of 1.11% whereas S&P 500 Futures is down 1.06% to 2,919 by the press time.

That said, the global policymakers are pushed to react to the widespread fears of the return of the 2008 financial crisis and hence announced further rate cuts, tax reductions, etc. However, expected rate cuts from the US Federal Reserve and the RBA are likely to be the first ones that the markets have already priced in. Recently, the BOJ Governor Haruhiko Kuroda followed the footsteps of Fed Chair Jerome Powell while showing aggression to act if situations worsen.

For the immediate direction, the traders’ fraternity will keep eyes on China’s Caixin Manufacturing PMI, expected 45.7 versus 51.1 prior, whereas the US Markit and ISM activity numbers will be the key to watch afterward.

However, nothing will dim the impact of coronavirus headlines to move the markets.

Technical Analysis

Buyers still need to cross $1,625 comprising lows marked during February25/26 to aim for the previous month high surrounding $1,690. On the downside, an ascending trend line from mid-January around $1,560 acts as the short-term key support.