Gold balanced by virus fears and China data
Outlook on epidemic still unclear, which will keep providing support for prices
Bengaluru — Gold prices held steady on Monday, as rising concerns over the severity of the coronavirus outbreak and its effect on global markets offset slight pressure from positive economic data from China and the US. Spot gold was little changed at $1,569.05/oz by 0313 GMT. US gold futures were flat at $1,572.70.
A team of international experts led by the World Health Organisation left for Beijing to help investigate the epidemic that has claimed more than 900 lives in mainland China, surpassing the death toll from the SARS epidemic.
Asian shares fell on market fears over the fallout from the epidemic. “There’s still a great deal of uncertainty around the [virus] impact and we’re seeing rising deaths and infections. The economic impacts are still unclear. If that’s the case, we’ll continue seeing reasonable support for gold,” said Michael McCarthy, chief market strategist at CMC Markets.
However, he said that a rise in China’s January producer and consumer prices “minutely hurt” gold. Also capping gold’s gains, the dollar touched a four-month peak earlier in the session against a basket of rival currencies after robust US nonfarm payrolls data on Friday.
The US Federal Reserve said the US economy slowed in 2020 on weak global growth, but the likelihood of recession has declined. The central bank flagged as risks the fallout from the coronavirus, “elevated” asset values and near-record levels of low-grade corporate debt.
“Investors should continue to favour more defensive fixed income and, therefore, long gold positions until the impact of nCoV on growth becomes apparent,” Stephen Innes, chief market strategist at AxiCorp, said in a note.
Holdings of the world’s largest gold-backed exchange-traded fund SPDR Gold Trust rose 0.13% to 916.08 tonnes on Friday, its highest since October 29.
Palladium advanced 0.6% to $2,329.83/oz, silver edged higher by 0.2% to $17.70, and platinum rose 0.6% to $970.83.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.