Corona Virus Impact on Gold Prices
Last week Gold tumbled nearly 100$ from its peak level of 1690$. Gold crashed from 1690$ to test 1570$ last Friday. Xauusd finally managed to close at 1585$ giving a mild relief to buyers. However this gold crash despite 10% cut in US stock market. Dollar Index also faced the wrath of sellers as it also declined nearly 9% from its peak.
Stock markets crashed around the world as COVID-19 grips more countries and more patients has been tested positive with virus. Major companies like Hyundai had to halt its production while Samsung also closed its mobile production unit as South Korea is worst hit after China.
Currently there are more than 80000 patients suffering from Corona Virus & more than 3000 deaths has been reported by this virus. Iran also reporting more and more cases daily and there are rumors that Iran is under reporting its covid-19 cases. Currently WHO denied to tag this virus as Pandemic but many experts are saying it has already become Pandemic.
Gold losing 100$ from its peak as major margin clicked due to extremely sharp sell off in dow jones & other stock markets. I assume funds and major investors had to liquidate their gold position in order to pay margin calls. Which also triggered major selling in precious metals.
Saturday we seen worst manufacturing numbers posted by China. It was obvious that China’s manufacturing will be hit as many cities are still in lock down but numbers were even scarier. Due to bad numbers from China gold opened gap up but how it will sustain is another matter.
Non farm payroll & Unemployment rate will be out this Friday from US. If job numbers are not good then we may see more sinking in Dow Jones which could bump the gold prices from lows.
For now gold is trading at 1598$. Good support in precious metal stands at 1588$. If trader break and sustain below 1588$. Then expect more pressure in xauusd till 1580$- 1570$.
Good resistance in xauusd chart stands at 1620$. If trader break and sustain above 1620$. Then expect good rise in gold till 1631$- 1642$.
Conclusion: Due to last week’s massive cut in gold price it has entered in weak zone. So avoid major buying till resistance is intact in market.
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