Gold prices continue to trade steady in a familiar range and have settled around $1,560 on Friday. The precious market has barely reacted to the recent developments surrounding a China virus that caused a massive risk aversion this week. Despite risk-off sentiment, gold demand remains subdued, suggesting investors prefer a wait-and-see approach.
Should the situation surrounding China improve any time soon, traders will resume demand for high-yielding assets, which is negative for safe-haven gold. In the immediate term, the yellow metal may come under some selling pressure should the upcoming PMIs out of Eurozone and the United States surprise to the upside and further ease concerns over the health of the global economy.
In this scenario, the bullion could get back below the $1,550 handle and even challenge the recent lows around $1,546 registered earlier this week. Meanwhile, a more aggressive retreat is unlikely as investors remain cautious amid the news headlines from Asia. As such, gold will likely continue to remain in a limited range in the near term, with risks still skewed to the downside, also due to mostly positive corporate results in the US. On the upside, the precious metal needs to overcome the $1,567 region in order to regain the bullish impetus.