Gold gapped up to $1,656 yesterday evening from a closing price of $1,648 on Friday, and reached a high of $1,691 overnight. Current resistance is at $1,700 as global traders push the yellow metal higher on Covid-19 fears. Judging by the swift reversal in global equity prices last night it would appear as though traders have finally lost confidence in China's ability to contain the virus, as well as the fact that it is now evident that China has been lying/misleading in regard to the actual rate of infection and death counts based on how fast Covid-19 is spreading in other countries, some seeing infection rates double on a daily basis.
With the US markets set to open in a few hours it will be interesting to see how US traders react, but if this is like any other significant decline in equity prices seen recently we should see government and Federal Reserve officials begin their usual round of jaw-boning today in an attempt to calm markets by reassuring them that more money will be printed and rates will be lowered if needed in order to stop the decline in stock prices. Ultimately, lower interest rates and more money printing is bullish long-term for gold.
With the US markets set to open in a few hours it will be interesting to see how US traders react, but if this is like any other significant decline in equity prices seen recently we should see government and Federal Reserve officials begin their usual round of jaw-boning today in an attempt to calm markets by reassuring them that more money will be printed and rates will be lowered if needed in order to stop the decline in stock prices. Ultimately, lower interest rates and more money printing is bullish long-term for gold.