Gold Hits 7 Year High More Upside To Come

Gold is advancing for the 8th straight session on Thursday and has climbed for 12 out of the past 13 sessions amid increased flows into safe havens. The metal’s historical value and scarcity, in addition to the fact that it is non yielding mean it’s a popular hedge for those expecting the financial markets to slump in the near future.

Safe haven flows
Gold has advanced in tandem with rising fears over the impact of the coronavirus outbreak. Coronavirus has weighed on economic growth forecasts and stock prices alike in recent weeks, leaving investors in search of havens for gains.

Interestingly, even on the days that the broader financial market has seen an uptick in demand for riskier assets, gold has managed to hold its own and trend northwards regardless. As long as coronavirus remains a threat and is in the headlines, we can expect gold to be well supported. Should the situation deteriorate then gold prices could pusher further northwards.

Latest coronavirus developments
Today news that the number of coronavirus cases in South Korea doubled and that two died onboard the Diamond Princess cruise ship rocked investor nerves. China posting a sharp drop in the number of new cases failed to ease fears, partly because of another change in diagnostic criteria which is creating a level of distrust surrounding the figures. China had just 394 new cases on Wednesday, down from 1749 the previous day. The total number of confirmed cases is at 74,576.

Levels to watch
Gold is trading at a 7 year high, up 0.6% today. It trades comfortably above its 50, 100 & 200 sma on the daily chart, with bullish momentum firmly intact. A break below the trend line around $1590 could negate the bullish trend, otherwise gold could advance towards $1650 (round number) and $1685 (high Feb 2013)

Immediate support can be seen at $1603 (today’s low) prior to $1580 (low 18th Feb & trend line support). This could open the doors to $1550 (low 4th Feb & trend line support).

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.