· Gold gained on Wednesday as worries over economic growth due to the fast-spreading coronavirus buoyed safe haven demand, as the Federal Reserve left rates steady.
Spot gold was up 0.65% at $1,5776.07 per ounce. U.S. gold futures rose 0.39% to $1,576.30 per ounce.
· The U.S. central bank kept interest rates unchanged at its policy meeting on Wednesday. Investors will want to hear whether its chairman, Jerome Powell, retains his cautiously upbeat language.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.
· “Other than the Fed factor, reasons for investors’ interest in gold are the coronavirus impact and how it will affect the Chinese economic data,” Haberkorn added.
The United States and Japan evacuated their nationals from a quarantined city, Wuhan, in China, while British Airways suspended flights as deaths from the outbreak rose to 132 and the first cases emerged in the Middle East.
Although better-than-expected corporate earnings helped drive a slight recovery in financial markets, fears over the economic fallout from the outbreak weighed on investor appetite for riskier assets.
On Tuesday, gold prices fell nearly 1% after positive U.S. economic data lifted equity markets along with the dollar.
Further bolstering gold’s appeal, U.S. Treasury yields also fell on concerns surrounding the epidemic.
· “The main driver for gold this year will be strategic inflows, as it will continue to be viewed as an attractive diversifier for investor portfolios in an environment where rates remain low,” UBS strategist Joni Teves said.
· Gold heading to $2,000? Prices surge on global fear
Gold was one of the few investments heading higher Monday as worries about the coronavirus outbreak led to a steep market slide.
Gold is now up more than 20% in the past year, and trading near $1,600 an ounce, its highest level since 2013. Other precious metals, such as silver and platinum, have rallied too.
"There are a lot of things that could go wrong for the stock market and the economic impact of a China slowdown from the coronavirus could be felt globally," said David Beahm, president and CEO of Blanchard & Company.
Gold isn't the only commodity that has benefited from worries about a slumping dollar and low interest rates. Silver, platinum and palladium prices have all soared as well in the past year.
"A 5% to 10% allocation in gold and gold stocks makes sense," says Ralph Aldis, a portfolio manager with US Global Investors. "This is the nascent start of a gold rally."
· Elsewhere, palladium fell 1% to $2,265.91 per ounce, while platinum eased 0.3% to $982.91.
Silver rose 0.2% to $17.48, having earlier dipped to its lowest since Dec. 23 at $17.35.
Reference: Reuters
Thai
Eng