A man holds necklaces in a gold shop in Chinatown in Bangkok, Thailand. US gold futures climbed 0.4% to $1,578.30. Picture: REUTERS/SOE ZEYA TUN
A man holds necklaces in a gold shop in Chinatown in Bangkok, Thailand. US gold futures climbed 0.4% to $1,578.30. Picture: REUTERS/SOE ZEYA TUN

Bengaluru — Gold prices rose to their highest in more than two weeks on Monday as equities slipped on growing concerns that a China virus outbreak could affect that nation’s economy, prompting investors to dump riskier assets and look for safe havens.

Spot gold rose 0.6% to $1,579.11 per ounce by 6.33am. Earlier in the session, prices rose to their highest since January 8 at $1,586.42.

US gold futures climbed 0.4% to $1,578.30.

Asian stocks slipped as the coronavirus killed 80 people and infected more than 2,000 in China, with residents of Hubei province, where the disease originated, banned from entering Hong Kong amid global efforts to halt the rapid spread.

Investors are “looking out for the new risk [coronavirus] coming into the markets and running for the exits in equity markets, that’s the cause for gold to move higher,” Stephen Innes, chief market strategist at AxiCorp, said.

“The virus is going to hurt the Chinese economy to a certain degree,” he added.

The outbreak has curbed Lunar New Year celebrations in China, when hundreds of millions of people would normally be travelling around the country, and also led the government to extend the holidays to February 2 as a preventive measure.

Gold is considered a safe investment during times of political and economic uncertainty.

“The continuation of the gold rally will rely on developments for good, or for ill, of the Wuhan virus situation,” Jeffrey Halley, senior market analyst at Oanda, said in a note.

“From a resistance point of view, the next level to watch is $1,600 an ounce.”

Meanwhile, the yen rose on worries that authorities are struggling to contain the outbreak.

Investors now await the US Federal Reserve’s first policy meeting of the year scheduled on January 28-29, where it is widely expected to keep rates unchanged.

Hedge funds and money managers cut their bullish positions in Comex gold contracts in the week to January 21, data showed on Friday.

Silver rose 0.6% to $18.20, having earlier touched its highest since January 8 at $18.32.

Palladium dipped 1.9% to $2,382.12 an ounce, while platinum fell 0.7% to $994.91.

Reuters