Gold futures pulled back on Tuesday as stocks looked to rebound from their steepest one-day loss since 2008 and as government bond yields jumped off their historic lows seen after a coronavirus and crude-oil sparked plunge.
A number of gold bulls, however, remain firmly optimistic on the outlook for the precious metal amid the uncertainty engendered by the coronavirus epidemic from China that has sickened at least 115,000 and claimed more than 4,000 lives world-wide.
Analysts at FXTM in an emailed note said that gold may yet test a seven-year high around $1,700.
“Gold is now testing the $1700 psychological level, the Japanese Yen is at its strongest against the Dollar since 2016,” wrote FXTM on Tuesday, referring to gains in the yen USDJPY, +2.10%, a currency that is considered a haven during times of uncertainty.
The 10-year U.S. Treasury note yield TMUBMUSD10Y, 0.645% was rebounding from its Monday nadir, rising 20.4 basis points to 0.702% from 0.50% the previous session. However, the benchmark debt yield was still firmly below 1% which has been a major support of for bullion price gains, as well as weakness in the U.S. dollar.
Gold for April delivery GCJ20, -1.19% on Comex was down $11.80, or 0.7%, at $1,663.90 an ounce, after posting a slight 0.2% gain on Monday, according to FactSet data.
May silver SIK20, -0.75%, picked up a penny, or less than 0.1%, at $17,060 an ounce, after falling 1.2% a day ago.
The rebound in risk asset prices early Tuesday is being attributed to expectation of additional fiscal stimulus from the U.S. government a day after U.S. equities saw their largest daily decline since the 2008 financial crisis. President Donald Trump floated the idea of payroll tax cut and a number of other measures intended to help limit the damage from the coronavirus on supply chains and local economies as a number of countries and regions have instituted lockdowns to contain or mitigate the viral outbreak.