Gold defends key support as S&P 500 futures decline

• Gold bounces up from an SMA support as stocks drop.
• Fears of the second wave of coronavirus weigh over the risk sentiment. 

Gold is looking to eke out gains amid losses in the US stock futures. 

The safe-haven yellow metal is currently trading near $1,732 per ounce, representing a 0.14% gain on the day. Prices tested the 5-day simple moving average (SMA) of $1,728 during the early Asian trading hours. 

The futures tied to the S&P 500 are reporting a 1.3% decline on the day at press time. Meanwhile, major Asian indices like Japan's Nikkei and South Korea's Kospi are flashing red. Stocks are feeling the pull of gravity seemingly due to fears of the second wave of the coronavirus outbreak. 

According to Bloomberg, Tokyo reported a jump in the number of cases over the weekend, and a market in Beijing was closed due to a fresh outbreak. In addition, more than 20 US states are seeing a pick-up in cases. 

The risk aversion will likely worsen if the coronavirus cases across the globe continue to rise during the week ahead. Moreover, a spike in cases would undermine the extreme optimism about a potential V-shaped recovery. 

Gold and other safe havens like the Japanese yen could draw stronger bids in case the sell-off in the global stock markets picks up the pace. The yellow metal jumped 2.86% last week, as the US stocks suffered their biggest weekly loss since March on coronavirus fears and the Fed-induced reality check. #gold##StocksDrop##CoronavirusOutbreak#

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