There is currently no green light from China on the subject of coronavirus. The number of infections is increasing. In Hong Kong, hospital staff have even demonstrated that all borders with the mainland are to be closed at last. At first glance, share prices, gold prices and oil prices react somewhat strangely to the crisis. We want to shed light on the current state of affairs here. OPEC could also play an important role here today. If you pay attention to oil today, we would just like to say something about that!
Shares rise thanks to “Help from China”
Markus Fugmann mentioned it this morning in his video outlook. China is flooding the markets with money. The coronavirus shouldn’t ruin the economy too much. This is currently giving hope to Western stock markets. The Dow 30 has risen 300 points since last night on a forward basis so far. The Dax has risen over 100 points since last night so far. So the hope is that somehow everything will be okay.
Gold price and Oil price under pressure
We have brought it up several times in the last few days. OPEC may feel compelled to extend its December cut in production (500,000 barrels a day less) in the short term in order to counter the huge drop in demand from China (thanks to Coronarivus). This could perhaps happen today? Because OPEC seems to be discussing with its partners (Russia in particular) whether to take action today. The oil price has fallen brutally for days. WTI oil reached its low yesterday at $49.69. So far, the oil price has already risen to 51.15 Dollars. Is this already the hope for OPEC? If there is a decision by the anti-trust cartel, will a small rally start and the oil price continue to rise? So, please take a closer look at oil today!
The price of gold continues to slide. The stock markets are “in good spirits” thanks to Chinese money pumping. In line with the motto “things will work out”. According to Alex Ho of investing.com, the latest injection of 400 billion Yuan was the largest single-day cash injection in more than a year. Where optimism is growing and the willingness to take risks is increasing, the Risk Off Trade quickly turns into a Risk On Trade. In other words, money flows from supposed “safe havens” such as gold back into stocks. Accordingly, the price of gold continues to fall today. At $1,591, the gold price was at its high on Monday morning. Since then, gold has been falling. In the last two hours, it has fallen even more sharply by -6 Dollars to currently 1,567 Dollars. The chart shows the movement of the gold price since the end of December. The long side should not be written off completely, considering how strong the upward trend was last week!