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Gold updates 7-year maximums due to news of coronavirus spreading outside of China

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Gold updates 7-year price maximums amid increased risks associated with the spread of coronavirus. 

 

The price of gold and other protective assets increased sharply after reports of the virus spread outside of China. South Korea reported 52 new cases of the virus on Friday. The total number of infected in the country is 156 people. Japan reported the first deaths aboard a cruise ship, which accounts for the largest group of people infected outside of China. Investors reacted very negatively to the statements made by Tedros Adhan Gebreesus, director of the World Health Organization, that a global outbreak of the virus could occur at any time.

 

Major stock indexes moved to the red trading zone, which provides additional support for gold and other safety assets.

 

Today, in addition to news of the virus spreading, investors will closely monitor the publication of preliminary data on the PMI of the manufacturing and services sectors in the EU and the USA, as well as data on secondary housing market sales in the USA.

 

Regarding the chart, the price broke through a local maximum at 1611.00 and continued upward movement. Now the growth continues and there are no signals on the chart for a reversal of the price movement. Therefore, the priority today is further increase.

 

Resistance Levels: 1630.00, 1640.00, 1650.00;

 

Support Levels: 1616.00, 1600.00, 1585.00.

 

The main scenario - an increase in the direction of 1640.00.

 

An alternative scenario - a decline below 1630.00 and a correction towards 1616.00.

 

The fundamental outlook is moderately positive. We consider longs with a decrease in prices around the target level of 1616.00.

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