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GOLD REPORT

Gold steadies as markets turn defensive

A weekly market summary for gold, Jan 20-24

MARKETS remained on edge as painful memories of the Severe Acute Respiratory Syndrome (SARS) resurfaced over the spread of a new coronavirus.

Asian equities clocked losses as investors pivoted from risk assets over growing concerns of a potential health pandemic.

The outbreak has kept gold prices steady while striking a cautious tone in global markets.

Mounting fears over the coronavirus will lift safe-haven appeal as markets trade risk cautiously over the Chinese New Year Holidays.

What should investors look out for in the longer term?

The US Federal Reserve (FOMC Meeting: Jan 28-29) looks poised to hold interest rates at 1.5 - 1.75 per cent amid signs of improvement in global economic activity. The US-China Phase One trade agreement has eased market anxieties while alleviating geopolitical risks for the current term. The commencement of the Chinese New Year Holidays will thin market liquidity as China takes a week-long break. Traders should keep close tabs on key developments for the new coronavirus as headline trades (event risk) will trigger sharp volatility across asset classes.

Technical analysis for spot gold (XAUUSD)

The precious metal has illustrated range-bound conditions as markets stay irresolute on price trajectory. Failure to hold price levels above US$1,535.00 will increase selling momentum as market bears take aim at the next main station of US$1,515.00 for the immediate term. On the flip side, gold prices must break above the key resistance level of US$1,570.00 for a resumption of the uptrend.

Weekly Market Assessment:

Range-Bound

Key Resistance Level (1): US$1,570.00

Key Resistance Level (2): US$1,586.00

Key Support Level (1): US$1,535.00

Key Support Level (2): US$1,515.00

  • The writer is an investment analyst at Phillip Futures.