Gold price edges lower as traders take profit after significant rally
The price of gold dipped a little over 1% on Tuesday after traders opted to take profit after an impressive bull run.
Gold prices slumped by 1% on Tuesday after traders opted to take profit from an impressive bull run that has seen the precious metal rally 30% since June last year.
The precious metal rose to a seven-year high in its previous session, driven by investors growing increasingly concerned about the spread of the coronavirus, with cases of the outbreak reaching mainland Europe over the weekend.
Gold is trading at $1656 an ounce as of 16:35 (GMT) on Tuesday.
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Coronavirus fears send global stocks plummeting
Global equities have continued to tumble this week after a rise in coronavirus cases renewed fears of an economic slowdown.
The Dow Jones and S&P 500 fell more than 1200 and 100 points respectively since Monday, representing a 4% decline for both benchmarks.
Meanwhile, the FTSE 100 threatens to fall below 7000 after sliding more than 5% this week.
‘There has been so much complacency in recent weeks from investors, despite clear signs that China's economy is facing a large hit and that supply chains around the world were being disrupted,’ investment director at AJ Bell, Russ Mould, told the BBC.
‘Markets initially wobbled in January, but had quickly bounced back, implying that investors didn't see the coronavirus as a serious threat to corporate earnings. They may now be reappraising the situation.’
As confirmed cases of the virus continue to rise investors will likely drive the price of gold higher, with the commodity considered a haven during times of uncertainty.
You can go long or short gold with IG using derivatives like CFDs.
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