Rising tensions between the Us and China over the coronavirus weakened risk sentiment.
Reuters reported that growing unease at the gulf between asset prices and gloomy economic reality turned investors cautions.
Mike Pompeo, the US secretary of the state, said that a significant amount of evidence exists uncovering that the coronavirus developed from a Chinese laboratory. However, he didn’t dispute US intelligence agencies’ conclusion that it was not human-made.
Gold and silver prices faced some gains. India Gold futures climbed tracking positive trends in the international gold prices. Still, they will remain vulnerable to profit-taking at higher levels.
It seems like the Trump administration is under the pressure of its bungles in dealing with the coronavirus outbreak. It has ramped up criticism of China’s response. Thus, the most powerful countries in the world are mired in a narrative war over the causes of the pandemic.
Manoj Jain, an independent market expert, stated that gold saw profits after the US President Donald Trump made a statement about imposing new tariffs on China.
Global markets drop sharply – Gold prices could be heading lower
Jain thinks that precious metals will remain volatile this week and expects lower level buying. Analysts warn investors about lower prices. Moreover, they think that gold prices could test support about $1650 an ounce in the near-term.
Global markets are beginning the week with a downbeat. Stocks are falling, and futures markets are predicting a negative opening for Wall Street.
Markets in France and Germany opened with a decline of more than 3 %. Futures market predicted Wall Street would open around 0.6 % lower.
Ole Hansen, the head of the commodity strategy at Saxo Bank, stated that headlines about countries easing their lockdown restrictions had rather a positive effect. It created some optimism in the financial markets and expects that the global economy will experience a V-shape recovery. While the short-term technical forecast for gold has worsened, long term fundamentals have not, Hansen said.
David Song, a market strategist at DailyFX, said that central banks start to reign in their unique emergency measures to support the stumbling economy. The recent pullback in the precious metal may gather pace in May as the RBA and BoE are expected to keep their interest rates at a record low. Furthermore, these expectations may dampen the appeal of bullion, Song reported. Finally, he added that a low-interest-rate environment, along with the ballooning central bank balance sheets, might continue to act as a barrier for bullion.