How high will gold go? Don't Mind The Correction

Fundamentals: As we are publishing this report Gold is trading at $1565 per ounce however the white metal is hovering around $17.60.Gold prices are moderately down after reaching three weeks high at $1590.Significant rebound in the U.S dollar index, U.S stock indices, and the latest ISM reading has pressured the precious metal sector down. The Institute for Supply Management (ISM) said on Monday its index of national factory activity increased to a reading of 50.9 last month, the highest level since July, from an upwardly revised 47.8 in December. A reading above 50 indicates expansion in the manufacturing sector, which accounts for 11% of the U.S. economy.silver prices were sharply down and the white metal has been weak since late December. We are witnessing less safe heaven demand in silver and on “risk-off” days silver prices are breaking lower with significant volume however we are keeping a close eye to this metal as it seems an opportunity is also building. we believe from risk to reward perspective Silver appeal among best opportunities at the moment. The coronavirus that has spread from China to other parts of the world remains in focus for the market. The latest counts show 17,500 Chinese citizens afflicted with over 350 dead. The global and domestic business has been significantly impacted there. The coronavirus outbreak has now reached more than 17,000 confirmed cases and killed more than 360 people in China alone. Outside of China, there are 150 confirmed cases and one death in the Philippines. On Monday $393 billion Got wiped from the Chinese stock market. Chinese economy has already been facing the downturn due to the trade war but now due to the coronavirus outbreak more severe downturn could be witnessed. Due to china's strong position in Global supply chains we could witness the severe downturn spread to other countries' stock index if factory closures are extended further and the market sell-off deepens. Due to China being the second-largest economy in the world, a broader economic impact couldn't be ruled out.

Summary: Significant rebound in the U.S dollar index, U.S stock indices, and the latest ISM reading have pressured the precious metal sector moderately down.No significant major chart damage has been done. Analyzing the current situation within the sector we believe moderate price decline In Gold near the $1500- $1530 Range could be a bargain to enter long. The solid technical resistance For Gold resides at the January high of $1,619 however breakout over the recent high could open a new wave of buying. We are witnessing less safe heaven demand in silver and on “risk-off” days silver prices are breaking lower with significant volume however we are keeping a close eye to this metal as it seems an opportunity is also building. we believe from risk to reward perspective Silver appeal among best opportunities at the moment.

Please note-We are not holding any position in our trading portfolio at the moment.