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Gold gains as markets count economic toll from coronavirus

Sumita Layek/Bengaluru
Filed on February 10, 2020
Gold gains as markets count economic toll from coronavirus

Spot gold rose 0.2 per cent to $1,572.86 per ounce by 1053 GMT.

Gold rose to a near one-week high on Monday as mounting concerns about the impact from China's coronavirus lifted the appeal of safe-haven assets, after the number of casualties exceeded 900.

Spot gold rose 0.2 per cent to $1,572.86 per ounce by 1053 GMT, having hit its highest since February 4 at $1,576.21 earlier in the session. US gold futures were up 0.2 per cent at $1,576.50.

Global shares fell as the death toll from the outbreak exceeded the SARS epidemic of nearly two decades ago, weighing on risk sentiment.

"The focus on the economic fallout from the continuous spreading of the virus in and outside of China is supporting gold," Saxo Bank analyst Ole Hansen said, adding prices could continue to see upward momentum.

Bullion is considered a safe asset in times of political and economic turmoil.

Further supporting bullion, the dollar eased from four-month highs against a basket of rivals, making gold cheaper for holders of other currencies.

Worries about the economic toll from the virus remained even as workers began to return to work in China after the government eased some restrictions, and data showed China's January producer and consumer prices rose.

"Economic data is not worth anything until we start to get data reflecting the latest changes or developments," Hansen said.

The world's second-largest economy has suffered since late last month from prolonged business closures, lockdowns and travel restrictions due to the outbreak, amid the Lunar New Year holidays, a peak time for travel and business.

The World Health Organisation has sent a team of international experts to Beijing to help investigate the epidemic.

On the technical front, "gold now faces the resistance level of $1,575 and a clear surpass of this level could open space for further rallies, with a first target of $1,600," ActivTrades chief analyst Carlo Alberto De Casa said in a note.

Palladium gained 1.4 per cent to $2,349.83 an ounce, silver rose 0.7 per cent to $17.80 and platinum was up 0.7 per cent to $971.16. - Reuters

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