(Reuters) - Gold prices rose on Thursday as worries about the economic impact from a fast-spreading coronavirus in China improved the metal’s safe-haven appeal.
Spot gold rose 0.3% to $1,581.75 per ounce by 0744 GMT and U.S. gold futures gained 0.7% to $1,580.90.
“The uncertainties surrounding the spread of the virus and its economic impact are supporting gold,” said Hareesh V, head of commodity research at Geojit Financial Services.
“Chinese (New Year) holidays have been extended, many companies have shut down ... factory output etc. will be impacted, so people trust gold as a safe haven.”
Gold gained 0.7% on Wednesday after the U.S. Federal Reserve held interest rates steady and Chair Jerome Powell said the central bank was not satisfied with inflation running below 2%.
“The Fed acknowledged the new risk (coronavirus) that has come to the market scenario, and said it didn’t see 2% 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.
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 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% to 903.50 tonnes on Wednesday.
Palladium lost 1.4% to $2,257.14 an ounce. The autocatalyst metal has gained 16% 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 gained 0.9% to $17.69, while platinum fell 1.2% to $962.46.
Reporting by Sumita Layek in Bengaluru; editing by Uttaresh.V and Subhranshu Sahu
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