Gold prices ease after WHO tempers coronavirus fears

Reuters New York, New York, United States of America Jan 24, 2020, 06.15 PM(IST)

FILE PHOTO: Gold bars Photograph:( Reuters )

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US gold futures slipped 0.3 per cent to $1,560.80 per ounce.

Gold edged down on Friday as the dollar rose and appetite for riskier assets improved after the World Health Organisation tempered fears of a global coronavirus outbreak.

Spot gold was 0.1 per cent lower at $1,561.18 per ounce by 1039 GMT but holding above the key $1,550 support level and en route to a post small weekly gain of about 0.3 per cent, as bets on easy monetary policy globally and lingering uncertainties on the world stage buoyed appetite for the safe haven.

US gold futures slipped 0.3 per cent to $1,560.80 per ounce. "Gold prices are facing headwinds from gaining equities and a stronger dollar but it is unlikely to fall below $1,520 as a bunch of geopolitical uncertainties still exist," Saxo Bank analyst Ole Hansen said.

European shares gained after the WHO designated the coronavirus outbreak an emergency for China but not yet for the rest of the world. However, the spread of the virus ahead of the Lunar New Year, a peak period of travel and gold demand in China, kept investor concerns heightened.

Also ReadGold prices climb to two week high as China flu scare spurs safe haven bids

Further, the dollar hovered close to a more than one and a half month high against a basket of currencies, making gold expensive for buyers holding other currencies. "With a low-interest-rate environment, geopolitical risks and uncertainties such as US President's impeachment, the conditions are still quite conducive to further upside in gold," ANZ analyst Daniel Hynes said.

Effects of the virus evident on Chinese public
[ Effects of the virus evident on Chinese public (Courtesy: Reuters) ]

After the European Central Bank left rates unchanged on Thursday, investors are looking to the US Federal Reserve's first meeting of the year scheduled on January 28-29.

However in the short-term, "the Libya oil issue and the coronavirus have not helped (gold) much and if this continues, we might see a challenging quarter ahead," Saxo Bank's Hansen said. Libya earlier this week declared force majeure on two major oilfields following a military blockade, and protests escalated in Iraq, pushing investors towards safe-haven assets.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.2 per cent to 900.58 tonnes on Thursday.
Elsewhere, palladium dipped 0.2 per cent to $2,457.10 per ounce and was on track to register its first weekly fall in five at about 0.7 per cent.
Silver rose 0.3 per cent to $17.84 per ounce but was set to post its biggest weekly decline since early-December at nearly 1 per cent. Platinum rose 0.3 per cent to $1,004.64 but was down 1.3 per cent for the week, its worst since the week ended December 20.