Breaking: Gold crashes below $1,600, margin calls cited

Yohay Elam FXStreet

Gold is trading below $1,600 despite the risk-off sentiment stemming from coronavirus fears.

Experts talking to Bloomberg have said that the yellow metal has been hurt by margin calls as several funds needed the cash amid the stock market crash. The metal is used to a liquid asset that occurs in the equity market, according to Standard Chartered.

Others say that overbought conditions have triggered profit-taking.

Beforehand, safe-haven flows have pushed XAU/USD to a seven-year high of $1,689.

Gold has reached hit a low under $1,585 at the time of writing. It is hitting the 200 Simple Moving Average on the four-hour chart, suggesting a potential bounce. However, the Relative Strength Index is still above 30, thus outside oversold conditions.

Nevertheless, after this sharp correction, XAU/USD has room to rise, especially if Covid-19 remains a scare.

See Gold may top $1,800 as coronavirus in Italy propels market panic – Interview with Kathleen Brooks

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Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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