Another Brutal Day For Equity Markets - Gold Resumes Its Climb

The brutality continues for the equity markets and the European futures are trading sharply lower once again today. Everyone cannot think of anything but Coronavirus. In Italy, the coronavirus cases continue to escalate, 424 people are infected and 12 individuals have died.  Investors are highly concerned about the impact of coronavirus on global growth. Obviously, without any vaccine on the market, traders aren’t going to feel comfortable and the equity markets are likely to remain rattled.

The Dow Jones index suffered from its worst two-day sell-off in nearly four years yesterday, and sadly, there is still more to come. The Dow Jones index dropped 0.46%, the SP500 fell 0.38% but the Russell index closed higher with a gain of 0.17%. The volatility index, VIX closed lower with a loss of 1.04% but still remained above the critical level of 20 that stimulates fear in the equity markets.

Yesterday’s session was intriguing because the US equity markets did start the day on a positive note however, the optimism started to fade away on the back of more cases of coronavirus cases.

Clearly, the market is highly sensitive and everything is pretty much headline-driven. Investors continue to weigh their options between risk-on and risk-off assets.  Policymakers are still downplaying the risk associated with coronavirus. This is despite the fact that over 81K people are infected and nearly 27K have died because of this.

Why The Gold Price May Touch 1700

The precious metal is back in green, investors have ignored the strong reading of the US new home sales yesterday. They have also disregarded the comments of the US president, Donald Trump who blamed media for making the virus more bad than it is. He said that the risk associated with Coronavirus for the US remain low. In reality, we think until and unless we get positive news in terms of the vaccine against the virus or slowdown in the spread of the virus, it is highly unlikely for the gold price to see any kind of serious selling pressure. The recent drop in the gold price is nothing more than a simple pullback because the gold price went up too fast and too quick. I still think the gold price has a real shot to kick the door and cross the 1700 mark in the coming weeks.