Picture: 123RF/Ronnarong Thanuthattaphong
Picture: 123RF/Ronnarong Thanuthattaphong

Bengaluru — Gold prices steadied after touching their lowest in two weeks on Wednesday, as reports of drug breakthroughs in treating the coronavirus lifted European shares and dented some of bullion's safe haven appeal.

Spot gold inched 0.1% lower at $1,551.38 /oz by 11.03am GMT, having fallen to its lowest since January 21 at $1,546.90/oz. US gold futures were flat at $1,555.50/oz.

“We're hearing some talks that the Chinese have found a drug against coronavirus, so on the back of that we have a pick-up in stock markets and sell-off in gold,” said Afshin Nabavi, senior vice-president at precious metals trader MKS SA.

European shares jumped more than 1% after a Chinese TV report said that a research team at Zhejiang University had found an effective drug for the virus.

“Investors are expecting less risk coming from the virus epidemic, good measures are being taken to try to contain the virus and that is giving good optimism in the markets,” ActivTrades chief analyst Carlo Alberto de Casa said.

The easing monetary policy measures from China have “calmed down the storm in the markets and investors are quite reassured by this”.

The virus outbreak in China since January has claimed nearly 500 lives so far and crippled activity in the second-largest economy in the world.

Concerns of the economic effect from the outbreak and any spillover in the global growth remained, with Chinese policymakers readying measures to support an economy jolted by a virus outbreak that is expected to have a devastating effect on first-quarter growth.

“Just the fact that nobody [in China] is going out, nobody is spending money, everything has come to a complete standstill, it's going to be very bad for the Chinese economy at least in the short term,” MKS SA's Nabavi said.

Among other precious metals, palladium was up 2.5% at $2,494.43/oz, having touched a near two-week peak of $2,498.07/oz earlier in the session. Silver shed 0.1% to $17.55, while platinum gained 0.7% to $969.82. 

Reuters

Picture: 123RF/Ronnarong Thanuthattaphong
Picture: 123RF/Ronnarong Thanuthattaphong