Gold Rose On Renewed Fears

Gold Rose On Renewed Fears

Overnight, gold rose on renewed fears that the coronavirus will trigger economic disruptions. Futures also rebounded after dropping sharply Tuesday. So far this morning, the yellow metal has shrugged off positive U.S. job numbers and a continued Stock Market rally.

Gold sticking firm after a significant private sector jobs report. Private payrolls rose by 291,000 in January, the best month since May 2015, according to ADP and Moody’s Analytics. The Dow responded by jumping 270 points higher, or 1%. The S&P rose 1% while the Nasdaq Composite traded 1.1% higher.

The gold market shows little reaction to the employment data with the April gold futures last trading at $1,558.0 an ounce, up 0.16% on the day. Currently, the contract is at $1,559.30.

Gold is the “only safe haven in town,” according to the South China Morning Post, which noted that prices of the precious metal are climbing amid virus fears rather than declining as they usually do after the Lunar New Year. Chinese markets reopened Monday after the extended holiday. The Shanghai Gold Exchange is the world’s largest physical gold exchange.

The coronavirus is a World Health Organization-designated global health emergency which has killed almost 500 people worldwide and sickened almost 25,000. It was first detected in Wuhan, China, and has shut down large swaths of the country. Some countries have restricted travel from China and international airlines have suspended flights.

China’s efforts to mitigate the economic hit from the virus with pledges of government spending, tax relief and subsidies for virus-hit sectors supported equites Tuesday and caused gold to drop.

Front-month gold futures fell 1.7% Tuesday to settle at $1,555.50 an ounce on Comex. The April contract declined 2% in the first two days of the week. Futures gained 4.3% in January, the best monthly performance since August. The Standard & Poor’s 500 Index rose the most since August on Tuesday.

The coronavirus is likely to delay the forecast benefits to the U.S. of its phase-one trade deal with China, White House economic adviser Larry Kudlow said Tuesday on Fox Business.

“It is true the `phase one’ trade deal, the export boom from that trade deal, will take longer because of the Chinese virus,” he said. Fox reported that Chinese Ambassador Huang Ping responded to the comments by saying he hopes that the coronavirus won’t impact the accord.

U.S. President Donald Trump, in his annual State of the Union address Tuesday evening, touted the strength of the U.S. economy, saying it’s “roaring” and “the best it has ever been.” But the speech was considered highly partisan and given in the House chamber where he was impeached in December. The U.S. Senate will vote on the articles of impeachment Wednesday, and Trump is expected to be acquitted.

In U.S. economic news, investors are awaiting the key monthly employment data for December, due out Friday.

Silver dropped 0.6% Tuesday to settle at $17.56 an ounce on Comex. The March futures contract retreated 2.5% in the first few days of the week. Silver futures rose 0.5% in January, lagging gold’s advance. Spot palladium, a metal used primarily in autocatalysts, rose 4.6% Tuesday and is up 6.3% for the week. It climbed 18% last month, setting new records amid a supply crunch. Spot platinum fell 0.4% Tuesday and is up 0.4% for the first two days of the week.

 

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