Gold Prices Suffer Worst Daily Decline Since 2013, Virus Fears Forefront
Gold Talking Points:
- Gold suffers worse intraday drop since 2013
- Equities hammered as gold drops in rare correlation
- Recent support eyed to stem further gold losses
Risk aversion in markets hit a fever pitch in recent days as coronavirus fears inject worry over the global economies’ ability to weather its impact. Despite the severe move seen across markets today, prompted by increasing concerns over the coronavirus, gold sold off along with equities to defy its more common negative correlation with the growth-sensitive asset class.
Spot Gold (1-Min Chart)
In recent months, gold has strengthened considerably and approached overbought conditions prompting traders to look for near-term consolidation. Spot gold started the week higher, gapping up in Sunday night trading to $1660.11, but began trading lower through the week. Friday saw the biggest intraday selloff in the yellow metal since 2013, as it dropped over 3.5 percent intraday.
Currently sitting at $1584.40, support from consolidation formed throughout January and February could buoy price from a further move down in the short term. Furthermore, continued deterioration in market sentiment could prompt gold to fall further as investors rotate capital into highly liquid assets such as cash and US treasuries.
Spot Gold (Daily Chart)
--Written by Thomas Westwater, Intern Analyst for DailyFX.com
Contact and follow Thomas on Twitter @FxWestwater
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.