Last updated on March 14th, 2020 at 06:32 pm
Spot gold prices today climbed to a two-week high after Apple Inc.’s issuance of a revenue warning for the quarter of March 2020 due to the impact of the coronavirus outbreak in China.
U.S. gold futures rose by 0.2% to $1,589.20 an ounce. Spot gold prices went up by 0.3% to $1,587.30. Earlier in the trading session, spot gold reached $1,589.20, its highest level since February 3.
Yesterday, Apple announced that it is unlikely to meet its target revenue of $63-$67 billion for the third quarter of 2020. The iPhone maker was significantly affected by the 2019-nCoV epidemic. China accounted for 18% of the company’s revenue in the first quarter of 2019 and for 15% in the previous quarter or $13.6 billion.
Apple’s iPhone manufacturing facilities in China have resumed production but are going way slower than expected. This will lower the number of iPhone units available for sale around the world. Some of Apple’s stores in China have reopened but are operating on reduced hours. Some stores are still closed. This will affect the company’s sales for the March quarter.
According to Margaret Yang Yan, an analyst with CMC Markets, Apple’s lower revenue guidance indicates that the market sentiment is risk-off. This favors the yellow metal. She also said that investors are very concerned with the impact of the coronavirus epidemic not only on the economy but also on consumer demand and business sentiment.
Apple’s announcement pushed down both the U.S and Asian stock markets. On the other hand, the U.S. dollar soared to a more than four-month high against a basket of currencies. It is also considered a safe-haven in times of political and economic uncertainties.
Yan added that the demand for safe-haven assets appears to outweigh the dollar’s impact on the price of the precious metal. She explained that the gold and the dollar are negatively correlated, but they are currently both in an upward trend.
Meanwhile, the number of new coronavirus infection in mainland China has dropped to below 2,000. But some experts said it is too early to tell if the epidemic has been contained. The government continues to alleviate the business impact of the outbreak. The central bank has reduced the interest rates on medium-term loans yesterday.
On the technical aspect of trading, OANDA senior market analyst Jeffrey Halley said the resistance price level of gold is in the $1,595-$1,600 an ounce price range. He said an increase above this level will indicate further gains ahead.
(Contributed by Jignesh Davda)
Gold prices have extended gains and are now at a level that is considered major resistance. An upward break from it would offer a strong bullish signal. The resistance level falls at $1588 and first served to hold the yellow metal lower on an upward spike on January 6. The same level then triggered a turn lower once again at the start of February.
For most of the year thus far, gold has been contained within a range. An upward range break would signal a bullish continuation in the breakout that started last summer. But at the same time, the yellow metal will need to show further upside momentum for such a thing to happen. If it fails to break resistance, the view of a range will remain which stands to draw bears.