Gold prices edged higher on Thursday after the US Federal Reserve Chair’s remarks that the new coronavirus outbreak could impact China’s economy in the short term boosted the safe-haven metal’s appeal.
Spot gold rose 0.1 per cent to $1,577.64 per ounce by 0613 GMT and US gold futures gained 0.5 per cent to $1,577.90.
“The Fed acknowledged the new risk (coronavirus) that has come to the market scenario, and said it didn’t see 2 per cent as a ceiling for inflation. In other words, it could continue cutting rates even if inflation remained higher,” said Michael McCarthy, chief market strategist at CMC Markets.
Gold gained 0.7 per cent on Wednesday after the US Federal Reserve held interest rates steady and Chair Jerome Powell said the central bank was not satisfied with inflation running below 2 per cent and that it is not a ceiling.
Powell acknowledged the risks of any short-term slowdown in China due to the virus, which has claimed 170 lives so far. The World Health Organisation (WHO) will reconvene on Thursday to decide whether the epidemic constitutes a global emergency.
Among equities, Asian stocks slipped to seven-week lows on worries about the fast-spreading virus.
Limiting gold’s advance, the dollar held close to a near two-month high hit on Wednesday, against a basket of currencies.
“At a minimum, gold will remain bid until the Wuhan flu becomes a transitory event. Still, with an array of risks simmering on the back burner, gold should remain in demand for the foreseeable future,” Stephen Innes, chief market strategist at AxiCorp, said in a note.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.5 per cent to 903.50 tonnes on Wednesday.
Palladium shed 0.8 per cent to $2,2269.58 an ounce. The autocatalyst metal has gained nearly 18 per cent so far this month, having hit a record high of $2,582.18 on Jan. 20, on supply worries.
Russia’s Norilsk Nickel said on Wednesday its Global Palladium Fund would deliver three tonnes of palladium ingots to the market from its current stock to provide a short-term relief to tight supplies.
Silver was up 0.3 per cent at $17.59, while platinum was down 0.8 per cent to $966.51.
Source: Economic Times
