Apple Inc’s revenue warning underscored the financial fallout of the coronavirus epidemic in China. More companies may lower growth forecast for the near term. Buy XAU/USD at dip.

Gold rose to a 1-month high after Apple warned investors on Monday, Feb 17th that their revenue could be hit from the ongoing coronavirus epidemic in China.

With most of their supply chains and demand for their products in China, businesses will be hit with the worsening situation in China.

Although Apple said that they expected the business disruption to be temporary, as long as the coronavirus outbreak continues to worsen, a global economic slowdown is expected.

We believe that most companies will also start to report lower growth and revenue forecast in line with the global economic slowdown.

Central banks around the world are also looking to loosen monetary policy, either by cutting rates or providing liquidity to the economy. This will in turn cause a further strengthening in gold.

XAU/USD is currently hovering around its resistance and the sudden gap up yesterday could create profit-taking from investors.

We expect a retracement back to the 1574. If that doesn’t hold, we could expect the next support to be a good entry at 1561 price level.