Gold Rises On Coronavirus Fears

Gold Rises On Coronavirus Fears

Gold rises on coronavirus fears, with the yellow metal hitting a two-week high early Monday as the virus continued to spread beyond China, adding to investors’ nervousness about a global health emergency that could disrupt the world’s economy.

Eighty people in China have died from the coronavirus and almost 3,000 are ill, the BBC reported early Monday. There are also at least 42 confirmed cases in other countries, including the U.S. and Australia. China extended the weeklong Lunar New Year holiday to Feb. 2 to try to dissuade people from traveling and transmitting the virus, according to CNN. More than 57 million people in 15 cities across China have been placed under full or partial lockdown.

Equities also extended a sharp decline at the end of last week, making gold more attractive as an alternative investment.

Front-month gold futures rose 1.1% last week to settle at $1,578.20 an ounce on Comex. The April contract advanced 0.4% Friday as the Standard & Poor’s 500 Index posted its biggest drop in almost four months. Currently, the February Contract is at $1,581.60.

“The outlook is bullish for gold, targeting $1,610 in the near term,” Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services, told Bloomberg from Mumbai.

Speculators cut bullish positions in gold in the week ended Jan. 21, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report. But Bloomberg noted that investors have increased their holdings in gold-backed exchange-traded funds to the highest level since November and just 25 tons short of a record.

Federal Reserve policy makers will meet for the first time in 2020 this week but aren’t expected to change rates. The European Central Bank on Thursday kept interest rates steady and indicated it’s likely to leave negative rates in place for some time.

In economic news this week, U.S. new-home sales data come out Monday, followed by durable goods and consumer confidence statistics on Tuesday. The Fed’s monetary-policy decision comes out Wednesday, and U.S. GDP figures are set for release Thursday.

Silver added 0.2% last week to settle at $18.11 an ounce on Comex. The March futures contract increased 1.6% last week.

Spot palladium, a metal used primarily in autocatalysts, decreased 2.9% last week but is still up 25% for January amid a global supply crunch. Spot platinum dropped 1.6% last week but is still up 4.1% this month.


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