Gold struggles to stay strong beyond $1600, Chinese headlines in focus

• Gold pulls back from the seven-week top as traders await fresh clues from China.
• The latest numbers from Hubei, China’s Xi and trade-positive news check the bullion buyers.
• Coronavirus updates, US data will be in the spotlight.

Gold prices step back from monthly high to $1,601.30 during the Asian session on Wednesday. The bullion earlier surged as headlines concerning China fuelled risk-off while a lack of major negative seems to trigger the latest pullback.

Coronavirus infections recede, death toll increases…

While Caixin raised doubts over the receding coronavirus numbers on Tuesday, the latest figures from Hubei, the epicenter of the deadly virus, suggest a mixed picture. As per the release, there are 1,693 new cases on February 18 versus 1,807 of February 17. The report also mentions 132 new deaths compared to 93 noted the previous day.

Read: Coronavirus peaking? How will it impact the global economies and FX?

China’s Xi remains optimistic…

Following Moody’s downgrade of China’s growth forecasts, Chinese President Xi Jinping was cited by Reuters to keep the economic optimism. “China can meet its economic growth target in 2020 despite the impact of the coronavirus outbreak, state television quoted President Xi Jinping as saying on Tuesday,” said the reported.

In addition to the Chinese President’s optimism, the earlier announced tariff cut on the 696 US goods by Beijing also plays in favor of the risk reset.

That said, the market’s risk tone remains sluggish with the US 10-year treasury yields recovering to 1.564% from sub-1.56% whereas S&P 500 Futures also following the suit with 0.13% gains to 3,375.

Given the current pullback in trade sentiment, investors will keep eyes on any headlines from China for further direction whereas the US economic calendar could entertain momentum traders afterward.

Technical Analysis

Unless declining back below the early-month top near $1,594, prices can continue to challenge the yearly high surrounding $1,612.