By Barani Krishnan
Investing.com – Gold closed at its highest in seven years as risk aversion continued over the coronavirus on Thursday, although some of the global markets’ fears were alleviated by the World Health Organization’s praise for China’s handling of the outbreak.
on New York’s COMEX closed up $13.20, or 0.8%, at $1,589.20 on Thursday. That was the highest close for a benchmark gold futures contract in seven years, since the settlement high of $1,594.80 set in March 2013.
But , which tracks live trades in bullion, was up just 82 cents, or 0.05%, at $1,577.54 per ounce by 4:00 PM ET (20:00 GMT), after rising to as high as $1,586 earlier. Bullion turned flat after WHO Director-General Tedros Adhanom Ghebreyesus expressed the world health body’s confidence in Beijing’s ability to bring the coronavirus under control despite declaring the outbreak a public health emergency.
Stocks in Asia and Europe were pummeled again on Thursday by fears over the health contagion. But Wall Street reversed early losses and closed higher on the WHO’s remarks about China.
Precious metals analysts, however, remained upbeat about gold’s prospects amid the crisis.
With the coronavirus, “gold prices, a barometer of our economic and political well being, is now also a health indicator that is sharply higher, expanding its trading range”, said George Gero, precious metals analyst at RBC Wealth Management in New York.
The coronavirus has killed more than 170 people so far in China and infected more than 8,000, and spread to at least 18 other countries.
Zhang Ming, a government economist at the Chinese Academy of Social Sciences, said on Wednesday that China’s economic growth may drop to 5 percent or even lower this year due to the coronavirus.
Both the IMF and Federal Reserve have said they were closely monitoring the impact of the outbreak in China and abroad.
But for all the fears generated by the virus, IMF spokesman Gerry Rice said there was a possibility that growth in both China and the world could rebound quickly in its aftermath, as noticed during the 2002-2003 SARS contagion, which also originated in China.
Gero, however, said gold’s value as a hedge to the contagion could linger.
“Remember that the SARS, swine flu, avian flu, zika virus and all passed eventually but left some economic challenges for some time,” he said. “Safe haven buyers will remain with gold in the post-contagion era.”
With a day to go before the end of January, both and bullion are up more than 3% each for the month, keeping with similar gains from December.
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Source: Investing.com
