Gold subdued as abating coronavirus fears whet risk appetite
· Gold prices eased to a near one-week low on Wednesday as risk sentiment improved after a drop in the number of new coronavirus cases comforted markets that the epidemic’s effects could be contained.
· Spot gold was steady at $1,567.77 per ounce, having touched its lowest level since Feb. 6 at $1,561.16 earlier. U.S. gold futures settled 0.1% higher at $1,571.60.
· “It’s basically just risk-on (sentiment) here. Some of the coronavirus fears seem to be fading a little bit and safe-haven buyers, who were buying gold, are starting to unwind some positions,” said Ryan McKay, a commodity strategist at TD Securities.
“Gold is going to continue to trade range-bound ... but the underlying factor that’s supporting gold is the Federal Reserve and the central banks globally, especially when the interest rates have been kept really low.”
· Investors’ appetite for riskier assets grew as a drop in the number of new coronavirus cases and the Federal Reserve chairman’s optimistic view of the economy lifted world stocks for a third day.
· China reported its lowest number of new virus cases since late January, lending weight to a prediction from its senior medical adviser that the outbreak might be over by April.
Also limiting gold’s appeal, the dollar held near a four-month high against a basket of rivals, making the metal expensive for investors holding other currencies.
· Fed Chair Jerome Powell on Tuesday told Congress the U.S. economy was in a good place, but cited the potential threat from the virus epidemic and concerns about the economy’s long-term health.
However, it was still unclear to what extent economic growth would take a hit from the fast-spreading virus that has killed more than 1,100 people, shuttered businesses in China and roiled financial markets since late January.
· “With a plethora of global risk simmering on the backburner supply chains and demand contraction notwithstanding, I still think it’s too early to downgrade Covid-19 to a nasty case of the sniffles and gold will remain bid on a dip,” 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 0.67% to 922.23 tonnes on Tuesday, the highest in over three months.
· In other precious metals, palladium gained 2.4% to $2,396.68 an ounce, silver fell 0.7% to a one-week low of $17.50 and platinum dipped 0.6% to $963.43.
Reference: CNBC
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