Gold: Bulls fighting back control amid looming coronavirus fears

• Broad USD weakness and negative equities underpin gold.
• Gold bounces-back towards $1650 amid persisting coronavirus fears.
• Virus headlines and risk trends will remain the key market drivers.

Gold prices are seen recovering from the overnight slump to $1625 region, as the bulls look to regain the 1650 barrier amid negative sentiment seen around the Asian stocks.

With the fast-spreading coronavirus spiraling outside China, with new cases being reported in the US, Singapore, Germany and several other European countries, investors continue to remain cautious amid looming risks to the global economic growth. The yellow metal’s safe-haven demand is back in play, as the Asian traders hit their desks.

Further, broad-based US dollar sell-off amid a meltdown in the US Treasury yields and Wall Street indices also helped gold to regain some footing. Despite the virus fears, gold extended its correction from a seven-year peak of $1689.40 and reached as low as 1625, as markets resorted to profit-taking after Monday’s dramatic rise.  

However, the renewed upside could likely fizzle out, in response to the rebound seen in the US equity futures and Treasury yields. Markets will continue to pay close attention to the coronavirus-related updates globally that could likely have a significant impact on the risk trends and in turn the safe-haven, gold.

Also, amid a lack of relevant US macro news, the risk sentiment will likely remain the main market driver.

Gold levels to watch out