· Gold prices rose on Thursday as concerns of a slowdown in global growth due to a virus outbreak in China weakened risk appetite among investors.
Spot gold was up 0.5% at $1,583.93 per ounce by 2:02 p.m. EST (1902 GMT). U.S. gold futures settled 0.8% higher at $1,583.50.
· “We have a bit of risk off in the market due to fears of global health from the coronavirus,” said Frank Cholly, senior market strategist at Chicago brokerage RJO Futures.
The first U.S. incident of person-to-person spread of the new coronavirus was identified in Illinois, the U.S. Centers for Disease Control and Prevention said on Thursday.
· “The coronavirus economic impact is growing and a flight to Treasuries and gold will likely remain the favorite trades on Wall Street,” Edward Moya, a senior market analyst at broker OANDA, said in a note.
· Federal Reserve Chair Jerome Powell also noted the risks of a short-term slowdown in China, including to the U.S. economy, after the central bank’s widely expected decision on Wednesday to keep interest rates unchanged.
“The Fed is not lowering rates, they’re in a holding pattern, but we are going to be in a low-rate environment for some time and that favors the gold market,” Cholly said.
Lower U.S. interest rates put pressure on the dollar and bond yields, increasing the appeal of gold and other non-yielding assets.
· U.S. Treasury yields dipped to three-month lows on Thursday and a closely watched part of the yield curve briefly inverted.
· Elsewhere, palladium was mostly unchanged at $2,289.70 per ounce, having hit a record high of $2,582.19 on Jan. 20 on supply concerns.
Silver gained 2.3% to $17.94, while platinum edged 0.1% higher to $974.71.
Reference: Reuters
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