Gold Steady Early Wednesday

Gold Steady Early Wednesday

Gold steady early Wednesday as investors sought direction amid uncertainty about the impact on the global economy of the coronavirus, which is rapidly spreading beyond China, and on economic policy from the Federal Reserve.

The coronavirus, first detected in Wuhan, China, has killed 132 people and has sickened more than 6,000 around the world as of late Tuesday. The number of people affected by the disease has exceeded the SARS outbreak in 2002 and 2003, though the World Health Organization has stopped short of calling it a global health emergency — at least so far. Chinese authorities have quarantined millions of people and places like Hong Kong and Russia have imposed travel restrictions, according to CNN.

Investors often turn to safe-haven investments like gold in times of global or economic uncertainty, and reports of the disease sent futures climbing late last week as equities dropped. But the U.S. stock market rebounded Tuesday amid strong earnings and as coronavirus fears damped. The increase in equities made gold less attractive as an alternate investment.

Front-month gold futures fell 0.5% Tuesday to settle at $1,575.80 an ounce on Comex. The April contract was down 0.2% in the first two days of the week. Swiss gold exports fell in 2019 to their lowest annual level since the data became public in 2012, Reuters reported. Currently, the February contract is at $1,568.60 and the April contract is at $1,573.90

Fed policy makers will announce their first monetary policy decision of 2020 Wednesday afternoon but aren’t expected to change rates. Investors will be watching for signals about future action on interest rates and indications about the health of the economy. The European Central Bank last week kept interest rates steady and indicated it’s likely to leave negative rates in place for some time.

In economic news, U.S. consumer confidence rebounded more than expected in January, reaching the highest level since August, Conference Board data released Tuesday showed. Durable goods orders rose in December, though The Wall Street Journal reported that the figures masked manufacturing weakness. U.S. GDP figures and initial jobless claims are set for release Thursday.

Silver tumbled 3.3% Tuesday to settle at $17.46 an ounce on Comex. The March futures contract fell 3.6% in the first two days of this week.

Spot palladium, a metal used primarily in autocatalysts, increased 0.7% Tuesday. It’s down 5.9% so far this week but still up 17% for January amid a global supply crunch. Spot platinum rose 0.2% Tuesday and is down 1.8% so far this week. It’s still up 2.3% this month.

 

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