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Demand for gold is growing amid news of the coronavirus spread and its impact on the global economy

After a technical correction, gold resumed its upward movement. The growth driver is still the news of the coronavirus spread and its impact on the economies of individual countries of the world.

 

This morning Caixin Media Co. published data on a private index of manufacturing activity in China. The indicator for the month decreased from 51.1 to 40.3 points, which is a historical minimum. The data indicates a widespread decline in business activity and a decline of production in China.

 

Another alarming factor for investors is news from the United States, where 2 people have already died from the coronavirus. The disease was confirmed in 86 cases, but specialists stated that in the near future this number may increase. All cases are being studied in Oregon, California, New York, Florida, and Rhode Island. The country's authorities are strengthening measures to combat the virus. US Vice President Mike Pence has promised to accelerate the pace of production and distribution of test systems that can determine the coronavirus infection.

Amid news of the spread of coronavirus in the United States, the US dollar continues to fall in price, providing additional support for gold.

 

The economic calendar today will focus on PMI data for manufacturing sectors and services in the US and Europe. This data will help assess the impact of the coronavirus epidemic on the economic situation in the regions. Weaker data can significantly increase the demand for gold.

Bullish signals prevail on the chart. After a fairly strong correctional movement, the price resumed growth and in the coming days we can expect a recovery in quotations in the region of 1630.00 - 1660.00.

 

Resistance Levels: 1605.00, 1630.00, 1680.00;

 

Support Levels: 1575.00, 1563.00, 1550.00.

 

The main scenario - a correction towards 1575.00 and an increase towards 1630.00.

 

An alternative scenario - a breakdown at the level of 1605.00 and an increase towards 1630.00

 

The fundamental outlook is positive. We consider longs near the level of 1575.00

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