Daily Brief, Mar 30: Everything You Need to Know About Gold on Monday

Posted Monday, March 30, 2020 by
Arslan Butt • 2 min read

Good morning, fellas.

On Monday, the eyes will remain on the German CPI and Pending home sales from the Eurozone and US respectively. However, the impact is likely to be limited in the wake of increased number of coronavirus cases around the globe, which have become the main highlight these days.

Speaking about the precious metal gold, the safe haven metal prices dropped to their lowest level after registering their biggest weekly gains since 2008. The yellow metal prices hit the session lows at $1,614 per ounce from the level of $1,700 mark last week due to broad-based greenback recovery in the wake of fresh risk-off market sentiment and representing 0.75% losses on the day. At the time of writing, GOLD is currently trading at 1,643.80 and consolidates in the range between 1,636.10 and 1,673.20.

Gold futures were down by 0.1% at $1,652.50 by 9:34 PM ET (2:34 GMT), after almost reaching the $1,700 mark last week due to fears about the economic impact damage from the COVID-19 outbreak. The Asian stock markets, which usually move in the opposite direction to gold, also dropped today. However, the COVID-19 outbreak is still showing no signs of slowing down as the World Health Organization said that there are now 638,146 global COVID-19 cases as of March 29.

Although, the futures tied to the S&P 500 are down 0.75% and stocks in Asia are also flashing red. It should be noted that the reason behind the losses in the equity market is the coronavirus intensifying fears, which gathered further pace in the US during the weekend. As we know, the Stocks were flashing green last week, possibly due to the fiscal and monetary stimulus relief packages provided by the US and other nations across the world.

At the USD front, the US dollar is getting support once again and pushing higher against risk currencies over the safe haven demand due to fresh losses in the equity markets. The dollar index, which tracks the value of the greenback against majors, is currently seen at 98.73, up 0.42% on the day.

The economic fallout in the West appears to have started, and further losses in the stock markets could be seen soon. As a result, the US treasuries (and the greenback) could continue to get support as safe havens in the near-term.

On the other hand, China delivered a rate cut by 20 basis points early on Monday and infused $7 billion liquidity into the banking system, but this also failed to put a bid under gold and risky assets so far. Looking forward, gold traders will be keeping a close eye on physical supply as virus-led lockdowns delayed supply chains. Considering all the fundamentals, the precious metal is following a mixed trend in the market. We need a clear cut fundamental reason to determine further trends of the market.

Daily Support and Resistance
S1 1587.99
S2 1606.28
S3 1617.04
Pivot Point 1624.56
R1 1635.32
R2 1642.85
R3 1661.13

On Monday, the precious metal gold continues to trade sideways within the same trading range of 1,594 – 1,642. The precious metal is likely to find immediate support around 1,609, and below this, the next support is likely to be found around 1,594.

Conversely, the bullish breakout of 1,623 levels can lead to gold prices towards the next resistance level of 1,642. Odds of a bearish trend remains high considering the recent candles on the 4-hour chart. Good luck!

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