By Giles Coghlan, Chief Currency Analyst at HYCM
Reasons for Gold's glow
Gold has had a pullback and now we have a base in place on the four-hour chart. Two dips down into the Pivot Point have found buyers each time.
So, technically that is a place to define some near term risk. Targets at recent highs around $1680.
From a fundamental perspective, the Coronavirus now looks uncontainable. Germany gave up trying to trace the infection route of every patient and there are more and more cases of 'community spread' popping up. i.e. people who have no known connection to a risk area. Furthermore, the ability of people to self-quarantine is unrealistic. For some of those working zero contract hours and self -employed contracts the option of taking two weeks off work will just not be there. People will work. Especially if they are asymptomatic.
So, gold will find buyers as more and more equity falls look ahead. It is difficult to predict all the losers from this so risk-off markets look set to stay here now until the cases plateau. Online vaulting service BullionVault, had its busiest day with £17million changing hands and buyers outnumbering sellers two to one, Goldcore, their rival, also had a record number of transactions with stored assets hitting $100million. ETF flows have seen a continued surge in prices as gold is getting more and more attention.
Therefore, expect gold buyers from market and below.
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