{"id":285,"date":"2020-02-24T19:22:58","date_gmt":"2020-02-24T19:22:58","guid":{"rendered":"https:\/\/goldsilverdesk.com\/news\/?p=285"},"modified":"2024-07-08T18:05:30","modified_gmt":"2024-07-08T18:05:30","slug":"gold-price-soars-as-virus-spreads-traders-anticipate-potential-monetary-easing","status":"publish","type":"post","link":"https:\/\/goldsilverdesk.com\/news\/gold-price-soars-as-virus-spreads-traders-anticipate-potential-monetary-easing\/","title":{"rendered":"Gold price soars as virus spreads; traders anticipate potential monetary easing"},"content":{"rendered":"\n

Allen Sykora – Monday February 24, 2020 10:09<\/strong><\/p>\n\n\n\n

Gold futures are sharply higher<\/strong> early Monday not only because investors are seeking safe havens as the coronavirus keeps spreading around the world, but also because they are starting to factor in the potential for central-bank rate cuts to offset any economic damage from the outbreak, analysts said.<\/p>\n\n\n\n

And while gold appears to be on the verge of\ngoing parabolic \u2013 rising roughly $100 in the last week \u2013 analysts say it would\nbe risky for speculators to pick a market top and sell, trying to benefit from\nany correction that might be coming.<\/p>\n\n\n\n

\u201cConcerns about the Covid-19 virus, which is now\nspreading rapidly in countries such as Italy and South Korea, are driving up\nrisk aversion among market participants and allowing gold to soar higher and\nhigher,\u201d said Daniel Briesemann, analyst with Commerzbank.<\/p>\n\n\n\n

As of 10:03 a.m. EST, Comex April gold was $25.60 higher to $1,674.50 an ounce and traded as high as $1,691.70.<\/p>\n\n\n\n

The Dow Jones Industrial Average is almost 800 points lower after the open on Wall Street.<\/strong> Commodities that are thought of as so-called risk assets, like copper and crude oil, are also weaker.<\/p>\n\n\n\n

\u201cRight now, because of the spread of the\ncoronavirus into different cities, people are starting to panic,\u201d said Phil\nFlynn, senior market analyst at Price Futures Group. \u201cThey are going into a\nfull-court press into gold…as concerns are growing that people see the virus\npotentially damaging economies and economic growth around the globe.<\/p>\n\n\n\n

\u201cThere are concerns that countries will have\nlower interest rates, thereby devaluing their currencies. That is making gold\nan attractive, safe haven.\u201d<\/p>\n\n\n\n

Phillip Streible, chief market strategist with\nBlue Line Futures, said traders and investors \u201cbelieve global central banks are\ngoing to come in and take appropriate measures, like monetary policy stimulus,\nin order to support not only falling equities but declining global [economic]\ngrowth.\u201d<\/p>\n\n\n\n

In particular, the spread of the virus and\ndrastic prevention measures taken in a Western nation such as Italy have\ncaptured the market\u2019s attention, he added. Four people have died from the virus\nin Italy. Nearly a dozen towns close to Milan, with a combined population of\nalmost 50,000, have been effectively put in quarantine, according to news\nreports.<\/p>\n\n\n\n

The yield on U.S. Treasury 10-year notes, which\nmoves inversely to the price, fell to the lowest level since 2016 as investors\nalso sought safety in the bond market, according to reports. Additionally, the curve\ninversion between three-month and 10-year yields deepened, often viewed as a\nsignal of a potential recession.<\/p>\n\n\n\n

\u201cThe ring of containment of Covid-19 has grown\nfrom China,\u201d said Marc Chandler, managing director with Bannockburn Global\nForex, LLC. \u201cThe new frontline is Japan, South Korea, Italy, and Iran. A\nlockdown of around 50,000 people near Milan and Austria blocking trains from\nItaly is scaring investors.\u201d<\/p>\n\n\n\n

The virus has killed more than 2,400 people and\ninfected more than 75,000 in China and has been spreading to other countries,\nwith sharp rises reported in South Korea, Italy and Iran. The World Health\nOrganization reported more than 1,400 cases in 28 countries outside of China.\nEight people have died from the virus in South Korea.<\/p>\n\n\n\n

Gold has risen so steeply that some might consider the move parabolic, and when any commodity goes parabolic, prices often correct sharply. However, Flynn said he personally would not consider trying to pick a top and establishing a short position right now.<\/strong><\/p>\n\n\n\n

\u201cWe know that when we see these parabolic moves,\nat some point, we\u2019re going to see the market pullback,\u201d Flynn said. \u201cBut you\ndon\u2019t want to stand in front of it right now\u2026. With the momentum in this\nmarket, nobody should try to be a hero and pick a top at this point. I think\nit\u2019s extremely dangerous, the way the headlines have been rolling in.\u201d<\/p>\n\n\n\n

Streible commented that if somebody was going to\nbet on a downward correction, he favors doing so by buying inexpensive put\noptions in deferred months rather than outright shorting the market. Otherwise,\na trader with a short position in the futures market would be \u201cburned\u201d if gold\ngoes up yet another $50, he commented.<\/p>\n\n\n\n

\u201cIt [gold] looks like it\u2019s got some serious wind behind its sails right now,\u201d Streible said. \u201cI wouldn\u2019t be surprised if we went up to $1,750.\u201d<\/strong><\/p>\n\n\n\n

Even with the pullback in equities, the U.S. stock market is not that far from its recent record highs, Streible added. As a result, he continued, \u201cpeople need to aggressively diversify out of U.S. equities and risk assets and strongly consider adding more defensive plays like gold and silver in their portfolios.\u201d<\/strong><\/p>\n\n\n\n

Flynn put the next upside chart level for April gold at $1,700, then the $1,730 area.<\/strong><\/p>\n\n\n\n

Gold is not only soaring in U.S. dollar terms, but a Commerzbank research note pointed out that the metal has hit record highs in several currencies, including the euro, Japanese yen, Indian rupee, Australian dollar and British pound.<\/strong><\/p>\n\n\n\n

By Allen Sykora<\/strong><\/p>\n\n\n\n

___________________<\/p>\n","protected":false},"excerpt":{"rendered":"

Allen Sykora – Monday February 24, 2020 10:09 Gold futures are sharply higher early Monday not only because investors are seeking safe havens as the coronavirus keeps spreading around the world, but also because they are starting to factor in the potential for central-bank rate cuts to offset any economic damage from the outbreak, analysts said. … Continue reading “Gold price soars as virus spreads; traders anticipate potential monetary easing”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-285","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"\nGold price soars as virus spreads; traders anticipate potential monetary easing - Gold Silver Desk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/goldsilverdesk.com\/news\/gold-price-soars-as-virus-spreads-traders-anticipate-potential-monetary-easing\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Gold price soars as virus spreads; 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