Gold jumps back above $1650 as coronavirus-led risk-off returns

• Risk-off returns on increasing coronavirus cases outside China.
• Gold’s profit-taking slide loses momentum, bulls regain $1650.
• Focus on virus headlines and US macro news for fresh impulse.

With risk-aversion seeping back into the European markets on Tuesday, the demand for the safe-haven gold is seen picking up pace, helping the price to recover from a fresh two-day low of $1633.10.

The yellow metal is back above the 1650 level, as a risk-aversion wave grips Europe, with the European equities shaving-off early gains while the US Treasury yields turned negative alongside a pullback in the S&P 500 futures.

The risk sentiment turned sour yet again amid rising coronavirus concerns, especially after South Korea reported its tenth death and 144 new confirmed cases.

The widening coronavirus outbreak threatens to have a significant negative impact on global economic growth, as investors run for cover in the ultimate store of value, gold. Worries over global growth prospects also boost the Fed rate cut bets, further benefiting the non-yielding gold.

Earlier today, the precious metal slipped nearly 2%, as markets resorted to profit-taking after the recent upsurge to a seven-year high of $1689.40. But the commodity failed to sustain the corrective slide, as a surge in the coronavirus cases outside China continued to underpin the sentiment around gold.

Gold levels to watch out

“The commodity’s rise past-$1,700 can take aim at highs marked during November and October 2012, respectively near $1,751 and $1,794. Alternatively, the metal’s declines below the stated resistance-turned-support, at $1,633 now, can recall March 2013 top near $1,617 and $1,600 mark ahead of pushing the bears to 21-day SMA near $1,590,” FXStreet’s Analyst Anil Panchal notes.