Gold close to two-week high as traders fret about effect of virus
Spot gold was little changed at $1,582.83 per ounce, having touched its highest since February 3 on Friday
Bengaluru — Gold prices held near a two-week high on Monday scaled in the previous session as uncertainty prevailed over the impact of the coronavirus outbreak on the global economy.
Spot gold was little changed at $1,582.83 per ounce as of 6.53am, having touched its highest since February 3 at $1,584.65 on Friday. US gold futures were steady at $1,585.90.
“Gold is holding firm at high prices as uncertainty around [the] coronavirus remains high, while the economic impact is still unclear,” said Michael McCarthy, chief market strategist at CMC Markets.
The death toll from the outbreak in mainland China reached 1,770 by Sunday, up by 105 from the previous day, the country’s National Health Commission said.
“Given the extent of the impact of the coronavirus in China, gold physical demand is likely to suffer. [But] it is too early to estimate the effects,” UBS said in a note dated February 14.
Premiums for physical gold in China, the world’s biggest bullion consumer, slid to their lowest since at least July 2018 last week.
The epidemic pushed Singapore to downgrade its 2020 economic growth forecast, while a Reuters poll showed Japanese manufacturers remained pessimistic in February.
The US Federal Reserve had also flagged concerns regarding the potential impact on the US economy.
Cleveland Fed Bank president Loretta Mester said on Friday the epidemic could be a drag on the US economy this quarter.
“Sentiment is friendly and there is an underlying bias to be long. For now, investors wait for fresh catalysts and/or more attractive levels to re-engage,” UBS said in the note.
Speculators increased their bullish positions on Comex gold in the week to February 11.
Asian shares moved back toward a three-week high on China’s efforts to cushion the blow from the virus, while the dollar hovered near a more-than four-month high.
“The dollar normally works against the gold price, but the fact that gold did rise despite that goes to say that it [dollar] doesn’t have much impact on gold at the moment,” CMC's McCarthy said, adding, the strong technical resistance of $1,590 is “limiting the enthusiasm in the market”.
Elsewhere, palladium rose 0.6% to $2,445.71 an ounce, silver was up 0.5% at $17.82, while platinum gained 0.6% to $968.95.
Trading is expected to be light as financial markets in the US will be shut for a public holiday.