Gold Up For Fourth Day

Gold Up For Fourth Day

Gold up for fourth day on coronavirus fears, trading near the highest level in seven years early Monday as the virus continued to spread, triggering a flight to safety by investors afraid of an economic disruption.

The world “may only be seeing the tip of the iceberg” when it comes to the coronavirus, World Health Organization Director-General Tedros Adhanom Ghebreyesus said in a tweet Sunday. The coronavirus is a World Health Organization-designated global health emergency which has killed more than 900 people worldwide and sickened almost 41,000. The global death toll exceeded that from the SARS epidemic over the weekend.

Front-month gold futures rose 0.2% Friday to settle at $1,573.40 an ounce on Comex. The April contract declined 0.9% last week but rallied 1.2% in the last three days of the week. Futures gained 4.3% in January, the best monthly performance since August. Currently, the April Contract is at $1,576.80.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.13% Friday to 916.08 metric tons, Reuters reported. Hedge funds and money managers cut their bullish positions in Comex gold contracts in the week ended Feb. 4, according to the Commodities Futures Trading Commission’s weekly Commitments of Traders report.

The coronavirus was first detected in Wuhan, China, and has shut down swaths of the country. Ghebreyesus’s tweet expressed concern about transmission outside China. The U.S. Federal Reserve indicated 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, which was released Friday.

“Because of the size of the Chinese economy, significant distress in China could spill over to U.S. and global markets through a retrenchment of risk appetite, U.S. dollar appreciation, and declines in trade and commodity prices,” the Fed report said Friday, according to Bloomberg. “The effects of the coronavirus in China have presented a new risk to the outlook.”

Investors will be awaiting further insight from Fed Chairman Jerome Powell, who is scheduled to testify before Congress this week about the state of the economy.

In economic news, China’s consumer-price index reached the highest level in more than eight years in January because of the coronavirus and the Lunar New Year, Dow Jones reported, citing official data Monday from the National Bureau of Statistics. The agency also said that China’s producer price index rose 0.1% in January from a year earlier.

Silver slid 0.7% Friday to settle at $17.69 an ounce on Comex. The March futures contract 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 1.1% Friday but advanced 1.4% last week. It climbed 18% last month, setting new records amid a supply crunch. Spot platinum rose 0.4% Friday and gained 0.7% last week.

 

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