Early on Tuesday, gold prices are trading bearish after weakening by around 1% in the previous session as a result of a strengthening in the US dollar and as a result of China’s measures to protect its economy in the wake of the coronavirus outbreak. At the time of writing, GOLD is trading at a little above $1,575.
On Monday, the market sentiment also received a bit of relief as investors felt confident about China taking active steps towards containing the spread of the virus and protecting its economy simultaneously. Over the weekend, China’s central bank PBOC injected additional liquidity into the markets to compensate for any potential weakness in the economy due to the shutdown caused by the outbreak.
While the improved market sentiment dented the safe haven appeal of gold and weakened it, the precious metal fell further on account of a stronger US dollar. The greenback gained around 0.44% of its value on Monday following a strong rebound in manufacturing activity after five consecutive months of contraction.
The US ISM Manufacturing PMI soared to 50.9 while the GDP grew at 2.4% during January 2020, supporting the bullishness in the dollar and sending gold prices lower as a result.