* Dollar index at four-month high
* Markets focus on U.S. Fed Chair’s testimony before Congress
* Gold denominated in euros slips from record highs
Feb 11 (Reuters) - Gold edged lower on Tuesday as European stocks surged to record highs and the dollar hit a four-month peak, after a fall in the number of new confirmed cases of coronavirus limited the appetite for lower risk assets and drove buying elsewhere.
Spot gold was down 0.1% at $1,569.80 per ounce by 1301 GMT, having touched its highest since Feb. 4 at $1,576.76 on Monday. U.S. gold futures shed 0.4% to $1,573.40.
“Equities are recovering and the Chinese economy is trying to come back to normal... so it’s not surprising to see risk-averse investments like gold coming under pressure,” said Commerzbank analyst Eugen Weinberg.
With expectations of virus risks diminishing, “the impact to the Chinese economy and to some extent the world economy is likely to be only temporary,” he said.
European shares hit a record high, while Asian share markets followed Wall Street higher on Tuesday as the number of new coronavirus cases slowed in China and the country’s factories slowly returned to work.
China’s virus epidemic may peak in February and then plateau before easing, the government’s top medical adviser on the outbreak said.
The virus in the world’s second-largest economy has killed more than 1,000 so far and threatened the country’s economic growth as companies struggled to return to work after an extended Lunar New Year holiday.
Further weighing on gold, the dollar rose to its highest since early October against a basket of rivals, making assets priced in the U.S. unit more expensive for holders of other currencies.
Meanwhile, gold in euros eased from a record peak of 1,444.76 euros per ounce hit in the previous session.
“We’ve this ad-hoc, completely unexpected (virus) factor driving demand for gold, but ultimately the growth prospects are being revised down (and) central banks are still continuing to ease their monetary policy, so the drivers for higher gold prices are there,” said SP Angel analyst Sergey Raevskiy.
Market participants were focused on Federal Reserve Chair Jerome Powell’s testimony before Congress, after two Fed policymakers played down the impact of the virus on the domestic economy.
Last month, Powell flagged the virus outbreak as significant, with effects on the Chinese economy at least in the short term.
Among other precious metals, palladium fell 1.1% to $2,327.05 an ounce, silver eased 0.1% to $17.74 and platinum edged 0.1% higher to $967.09. (Reporting by Sumita Layek in Bengaluru; Editing by Jan Harvey and Barbara Lewis)
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