Gold Rises Sharply Due to Wuhan Pneumonia Fear

  • Investors are leaving the stock market to switch to this precious metal, as the US Dow Jones index fell 1.57% to 28,535 points.
  • This year, along with global political instability, and fear of Wuhan pneumonia, gold is having a lot of favorable conditions to break the price threshold.
  • The Dollar's price increased sharply against the Euro, and reached the strongest level since December 2019.

World gold prices continued to rise in light of worry about the Wuhan pneumonia epidemic spreading worldwide. In the session on January 28, the world gold price increased by 0.6%, to $1,580 an ounce. This is the highest level in the past three weeks. Investors often look to gold as a safe haven during uncertain times. Thus, the current outbreak of coronavirus has been widely thought of as the reason for the gold price increase.

The 2019 novel coronavirus, also known as 2019-nCoV, is the virus causing the 2019–20 Wuhan coronavirus outbreak. The first suspected cases were officially reported to the WHO on 31 December 2019.

Investors are leaving the stock market to switch to this precious metal, as the US Dow Jones index fell 1.57% to 28,535 points. Some analysts, though, recommend that the price of gold may be too high, as gold has risen nearly 21% from last year. ABN AMRO Bank warns of possible price adjustment in the coming weeks but will keep the momentum of price increase in the long term.

Previously, the price of gold futures trading floor rose to a nearly 7-year high of $1,613 an ounce on January 8, in the context of tension about the potential war between the US and Iran. However, fears of war were quickly extinguished, and prices subsequently fell back to the bottom of gold at $ 1,536.40 an ounce.

Technically, gold’s next short-term breakout target is to create a close above the solid technical resistance at the highest level in January of $1,613 an ounce. The next short-term price drop target is pushing prices below solid technical support at $1,550 per ounce.

In the past, the new spring was always a time when gold prices had quite strong due to the demand for gold. This year, along with global political instability, and fear of Wuhan pneumonia, gold is having a lot of favorable conditions to break the price threshold.

ABN AMRO Bank N.V. is a Dutch bank with headquarters in Amsterdam, and the third-largest bank in the Netherlands. It was re-established in its current form in 2009, following the acquisition and break-up of the original ABN AMRO by a banking consortium consisting of Royal Bank of Scotland Group, Santander Group and Fortis.

Coronavirus Caused Fear to Cover the International Monetary Market

Accordingly, €1 exchanged $1.1019; $1 USD for ¥109,00; and £1.3062 for $1. The Dollar’s price increased sharply against the Euro, and reached the strongest level since December 2019. The market is focusing attention on the results of the US Federal Reserve meeting. Investors expect the Fed will keep rates unchanged, at least this year.

Meanwhile, the price of the Japanese Yen soared against the US Dollar. Japanese Yen is considered a safe haven when investors worry. Stocks and global oil prices have dropped in recent sessions on fears that the Wuhan pneumonia could cause further damage to China’s already weakened economy.

The Australian dollar traded at $0.6760, near the three-month low. The New Zealand dollar was listed at $0.6547, after falling on Monday to its lowest level since mid-December. Both countries have extensive trade relations with China, with tourism and special education is easily interrupted by viruses. US dollars per Japanese Yen rose 0.1%, to ¥109.

Analysts said that in the context of low-interest rates and less profitable bonds, gold is a quite attractive and safe investment channel. The question is that the price of gold has increased throughout 2019, so will gold prices continue to go up in 2020?

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Benedict Kasigara

I have been working as a freelance editor/writer since 2006. My specialist subject is film and television having worked for over 10 years from 2005 during which time I was the editor of the BFI Film and Television.

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