February 5, 2020 / 11:31 AM / 13 days ago

PRECIOUS-Gold near 2-week low after reports of anti-coronavirus drug

(Updates prices and details)

* European shares jump more than 1%

* China virus expected to have devastating impact on Q1 growth

By Sumita Layek

Feb 5 (Reuters) - Gold prices steadied after touching their lowest in two weeks on Wednesday, as reports of drug breakthroughs in treating the coronavirus lifted European shares and dented some of bullion’s safe haven appeal.

Spot gold was little changed at $1,551.97 per ounce by 1324 GMT, having fallen to its lowest since Jan. 21 at $1,546.90. U.S. gold futures rose 0.1% to $1,557.20.

“We’re hearing some talks that the Chinese have found a drug against coronavirus, so on the back of that we have a pick up in stock markets and sell off in gold,” said Afshin Nabavi, senior vice president at precious metals trader MKS SA.

European shares jumped more than 1% after a Chinese TV report said that a research team at Zhejiang University had found an effective drug for the virus.

However, the World Health Organization played down media reports of “breakthrough” drugs for treatment of coronavirus saying “there are no known effective therapeutics against this 2019-nCoV (virus)”.

“Investors are expecting less risk coming from the virus epidemic, good measures are being taken to try to contain the virus and that is giving good optimism in the markets,” ActivTrades chief analyst Carlo Alberto De Casa said.

The easing monetary policy measures from China have “calmed down the storm in the markets and investors are quite reassured by this.”

The virus outbreak in China since last month has claimed nearly 500 lives so far and crippled activity in the second—largest economy in the world.

“Just the fact that nobody (in China) is going out, nobody is spending money, everything has come to a complete standstill, it’s going to be very bad for the Chinese economy at least in the short term,” MKS SA’s Nabavi said.

Concerns of the economic impact from the outbreak and any spillover in the global growth remained, with Chinese policymakers readying measures to support an economy jolted by a virus outbreak that is expected to have a devastating impact on first-quarter growth.

ADP national employment report showed U.S. employment increased by 291,000 private sector jobs in January, its highest since May 2015.

Among other precious metals, palladium was up 1.8% at $2,477.30 an ounce, having touched a near two-week peak of $2,498.07 earlier in the session.

Silver rose 0.1% to $17.59, while platinum gained 1.1% to $973.43. (Reporting by Sumita Layek in Bengaluru, editing by Louise Heavens)

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