Gold Still Near Seven-Year High

Gold Still Near Seven-Year High

Gold still near seven-year high — but dimmed early Wednesday after the Chinese government’s senior medical adviser said that the coronavirus scare, which has triggered a flight to safety by investors, may be over by April.

“I hope this outbreak or this event may be over in something like April,” Zhong Nanshan, the 83-year-old epidemiologist who won fame for battling the SARS epidemic in 2003, told Reuters in an interview. “We don’t know why it’s so contagious, so that’s a big problem.”

Front-month gold futures fell 0.6% Tuesday to settle at $1,570.10 an ounce on Comex. The April contract rallied 1.5% in the previous four sessions. Currently, the April contract is at $1,569.40. Futures gained 4.3% in January, the best monthly performance since August. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.67% Tuesday to 922.23 metric tons, its highest level in more than three months, Reuters reported.

The coronavirus, first detected in Wuhan, China, is a World Health Organization-designated global health emergency which has killed 1,115 people worldwide and sickened more than 45,000. The bulk of the casualties have been in China, and governments and airlines have restricted travel to the country.

Gold also came under pressure as the dollar traded near a four-month high amid safe-haven investing. A stronger dollar typically reduces gold’s attractiveness as an alternate investment.

The U.S. Federal Reserve indicated last week that the coronavirus presents a “new risk” to the U.S. economic outlook and could disrupt global markets, according to the central bank’s semiannual report to Congress.

In testimony Tuesday, Fed Chairman Jerome Powell said the central bank is closely watching the epidemic. The economy is doing well and the Fed will probably hold interest rates steady, he told members of the House Financial Services Committee. He is scheduled to testify Wednesday before the Senate Banking Committee.

In upcoming economic news, the U.S. core consumer price index for January, a gauge of underlying inflation, is set for release on Thursday. Weekly initial jobless claims are also scheduled to come out.

Silver slid 1.1% Tuesday to settle at $17.60 an ounce on Comex. The March futures contract is down 0.5% in the first two days of this week and retreated 1.8% last week. Silver futures rose 0.5% in January, lagging gold’s advance.

Spot palladium, a metal used primarily in autocatalysts, fell 0.4% Tuesday but is up 1.3% so far this week. It climbed 18% last month, setting new records amid a supply crunch. Spot platinum rose 0.9% Tuesday and gained 0.7% last week.

 

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