Gold prices are declining marginally on Thursday though rising concerns over a spread of a Chinese virus cap losses in the precious metal. The bullion struggled to challenge the $1,570 region earlier this week and had to retreat but still remains in a limited range. The fact that we see a lower volatility in gold market these days suggests that traders have probably taken a wait-and-see approach amid global developments, where a dangerous virus outbreak remains in market focus since the start of the week.

On the other hand, gold bulls struggle amid the narrowing threat of a global trade war, after the United States and China signed a partial trade deal and the US and France reached a trade truce. This coupled with the improving economic fundamentals in major countries helps to ease concerns over geopolitics and recession. This in turn curbs the appeal of the yellow metal, as demand for safe haven assets rises in times of geopolitical and economic uncertainty. 

In a wider picture, negative developments surrounding the virus theme could lift gold prices going forward. In many ways, it will depend on the World Health Organization on whether to declare a global emergency over the outbreak. If there is an emergency announcement, risk aversion will intensify dramatically, as the consequences may affect the global economy. 

From the technical point of view, gold remains in a familiar range and the current dynamics looks neural as long as the bullion stays above the $1,535 region, where the key support lies. In the immediate term, the important support area comes at $1,545. On the upside, the $1,568 level matters, as a break above it will open the way towards $1,580 and then to $1,600. In the hourly charts, the picture looks bearish, with the prices challenging the 200-SMA after an earlier break below the 100-SMA. A break below $1,550 will worsen the short-term picture. Still, the downside risks are looking limited at the moment, and another wave of risk aversion could lift prices from the current levels.


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