Gold Aiming at $1,700

Gold Aiming at $1,700

Gold aiming at $1,700 an ounce today, setting another seven-year high as investors’ flight to safe-haven assets accelerated when coronavirus cases outside of China spiked, heightening concern about the possible spread, duration and economic impact of the virus spread around the world.

The yellow metal advanced for an eighth straight session on Comex to a new seven-year high, Equities tumbled, and the dollar rose. World Health Organization Director-General Tedros Adhanom Ghebreyesus said the “window of opportunity is narrowing” to contain the virus to mainland China. The number of cases in South Korea rose above 760, those in Italy jumped to 152 over the weekend from three and Iran confirmed 43, including eight deaths, CNN reported.

The coronavirus, designated COVID19, has killed more than 2,600 people worldwide and sickened more than 79,000. Most of the cases have been in China, where the outbreak started. The virus is a WHO-designated global health emergency.

April gold futures rose 3.9% last week to settle at $1,648.80 an ounce on Comex. The front-month contract is up 3.8% this month after advancing 4.3% in January, the best monthly performance since August. Currently, the April contract is at $1,681.10. Speculators increased their bullish positions on Comex gold in the week ended Feb. 18, according to the Commodity Futures Trading Commission’s Commitments of Traders report, released Friday.

Finance ministers from the Group of 20 nations, representing the world’s largest economies, met over the weekend in Riyadh and pledged to increase monitoring of the coronavirus’s impact on global growth, and act if necessary, Reuters reported. They also said that loosening monetary policy and easing trade tensions would prompt an expansion in 2020 and 2021.

In economic news this week, U.S. GDP, initial jobless claims, durable goods and pending home sales data are due out on Thursday. Japanese industrial production, jobs and retail sales figures are scheduled for Friday.

Front-month silver futures rose 5% last week, and the May contract settled at $18.61 an ounce Friday on Comex. Silver is up 3.3% so far this month after a 0.5% rally in January.

Spot palladium, a metal used primarily in autocatalysts surged 11% last week and touched a new record amid the on-going supply crunch. It’s up 18% this month. Spot platinum rose 1% last week and is up 1.5% this month.