Gold prices are back to trading bullish on Wednesday, reversing the previous session’s losses and heading towards seven year highs as coronavirus fears dominate the market sentiment once again. At the time of writing, GOLD is trading at a little above $1,640.

On Tuesday, gold lost as much as 1.9 % of its value after touching the highest level in seven years earlier this week. However, the continued bearishness in global stock markets help increase the safe haven appeal of the precious metal sending it back on its bullish track.

Although China is reporting fewer cases of infections and is looking at easing some of the restrictions, cases of coronavirus and the death toll continue to climb higher across other countries including South Korea, Italy and Iran. This has increased expectations that virus could lead to either a stagnation or a contraction in economic growth across several countries and could also have spillover effect on the US economy.

Expectations for a rate cut by the Federal Reserve have also climbed over the past couple of sessions, sending gold prices higher. In addition, the recent weakness in the US dollar is also contributing to gains in the yellow metal as the two share a negative correlation with each other.