Chart of the day: Gold takes another run against weak Aussie dollar
Gold is trying a modest run higher against the AUD in early Asian trading after yesterday’s daily candle closed 50 points lower. Is there a buying opportunity today in the pullback?
Since yesterday’s sell-off, Switzerland and Croatia have reported their first cases and Austria two more, meanwhile authorities have held 1000 guests in a hotel after an Italian tourist tested positive for the virus. What do these new cases have in common? They’re all linked to Italy.
Fears are increasing that Italy’s 200 confirmed cases could spread the virus throughout Europe. Across the Atlantic, the US Centres for Disease Control and Prevention has since warned Americans to prepare for a virus outbreak on US soil. US stocks have sold off, the Dow dropped over 1000 points on Monday. This reduces the demand for US a touch, which has so far held up amid global virus panic.
Add to this gold’s inverse relationship with US 10-year treasuries, which fell this morning to a record low 1.3055% in the flee to safety, and the investment case for gold remains. So far in today’s trading, the precious metal is appreciating against different currencies.
A daily close above 2500, preferably above 2512, should give the bulls conviction to take XAUAUD for another run higher.
Gold bulls will have an eye on the gold in AUD terms as the weak AUDUSD cross hovers at post-GFC lows. If coronavirus fears continue to lift, which unfortunately seems the case, investors will continue to move their money into gold while the AUD should trade lower.
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