· Gold prices edged lower on Thursday as cautious investors awaited a policy decision by the European Central Bank due later in the day, although mounting concerns over a virus outbreak in China provided a floor under prices.
Spot gold was down 0.1% at $1,557.37 per ounce by 0617 GMT. U.S. gold futures were unchanged at $1,557.
With more than 500 confirmed cases and 17 deaths in China from the new coronavirus, the World Health Organization will decide on Thursday whether to declare a global emergency over the outbreak.
· “It looks like the market doesn’t really have the impetus it needs to go one way or another, even the coronavirus outbreak did not give gold a meaningful run,” said Ilya Spivak, a senior currency strategist at DailyFx.
However, “If there is an (WHO emergency) announcement, the markets might conclude or be concerned that we might have a SARS-like response, where there is significant economic impact and gold might go up on that,” he said.
The Severe Acute Respiratory Syndrome (SARS) epidemic in 2002-2003, also a coronavirus outbreak, had started in China and killed nearly 800 people worldwide and hit the global economy.
· Gold is considered a safe asset in times of political and economic uncertainty.
Traders remained anxious about the spread of the virus as China gears up to celebrate the Lunar New Year from this weekend, a peak period for travel and gold demand in the region.
· Under investors’ radar is a monetary policy meeting by the European Central Bank, where ECB President Christine Lagarde is also set to launch a broad review of its policy that is likely to see her redefine the central bank’s main goal and how to achieve it.
· “Lower interest rates and accommodative monetary policy are the reality, and this favours investment demand for gold ... though, the sector remains vulnerable to brief pullbacks, as investors lock-in profits,” ANZ analysts said in a note.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
· Spot gold is biased to revisit its Jan. 21 low of $1,545.96 per ounce, as it looks shaky around a resistance at $1,564, said Reuters technical analyst Wang Tao.
· Among other precious metals, palladium gained 0.3% to $2,478.24 an ounce, silver fell 0.6% to $17.71 per ounce, while platinum dipped 1% to $1,002.13.
· Gold Price Analysis: XAU/USD rolling into Asia nearing the 1560 resistance
XAU/USD is trading in an uptrend above the main daily simple moving averages (SMAs). After rejecting the 1600 mark earlier in the month, the market is now consolidating.
Gold is nearing the 1560/63 resistance while trading above the main SMAs. A break above the price zone can lead to further advances towards the 1571 and 1580 resistances.
The market is trading in an ascending triangle while above the main SMAs. Support is seen at the 1555 and 1550 level.
Reference: Reuters, FX Street
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