Gold has rallied to a seven-year high of $1,682 as fears surrounding a potential coronavirus pandemic continue to build.
The tremendous seven percent rally over the past five days coincides with a dramatic slide in the stock market, with billions of dollars being wiped from the world’s major markets.
Coronavirus was first detected in Wuhan, China, and has since spread across Asia and now Europe, with more than 190 people being tested positive in Italy where five people are believed to have died from the disease.
“I wouldn’t panic but I’m certainly concerned at what’s happening in Italy,” EU infectious disease expert Professor Herman Goossens told BBC Radio 4’s Today programme.
The FTSE 100 was down by 3.5% this morning with markets in Germany, France and Spain seeing heavier intraday declines – a pattern which has also been mirrored across all Asian markets.
As major industries begin to feel the effects from the spread of coronavirus it’s logical to see assets like gold and Bitcoin – both hedges to the traditional financial system – rally as investors seek a safe haven amidst a turbulent market.
With a gold breakout clearly underway, key levels to look out for are at $1,710, $1,754 and $1,785, with a level of support remaining at $1,650.
It will also be interesting to monitor this week’s Bitcoin price action as it has mirrored gold’s chart since the turn of the year, rallying by 41.20% with gold surging by 13.35%.
If the coronavirus outbreak reaches the likes of the United Kingdom, Germany and America, it would certainly have serious ramifications on global industries, markets and supply chains.
This will undoubtedly cause assets like gold and Bitcoin to continue to rally over the coming months as investors and funds attempt to avoid crippling losses.
Price targets for Bitcoin are at $10,900, $13,200 and $14,000 following May’s halving event, which will see block rewards slashed from 12.5BTC to 6.25BTC per block.
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Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.