Gold eases from one-week peak as equities gain because of virus fears
Gold eased from a more than one-week high on Friday as hopes for global measures to soften the blow of the coronavirus outbreak increased appetite for equities, but more new cases limited bullion losses and kept the precious metal on track for a weekly gain.
Spot gold was down 0.1% at $1,575.35 per ounce as of 0651 GMT, having touched its highest since Feb. 4 at $1,577.89 earlier in the session.
U.S. gold futures were flat at $1,578.50.
“Equities market has shrugged off the bearish sentiment and has started to move higher as investors are reassessing the potential (economic) impact of the virus,” Margaret Yang Yan, a market analyst at CMC Markets said, adding that a strong dollar is also pressuring bullion.
Asian shares looked to post their second straight week of gains, while the dollar rose to an over four-month high.
However, analysts said interest in gold remained intact as the death toll in China’s Hubei province rose, with nearly 5,000 new cases of infection.
Bullion has gained about 0.3% so far this week.
Expectations that the virus could hurt the global economy as well as easy monetary policy from central banks are keeping gold attractive, CMC’s Yan said.
Investors are watching for U.S. retail sales and consumer confidence numbers due later in the day.
“The U.S. consumer is really the biggest piece of global growth at this point, with China getting a hit due to the trade war and the virus. Europe is still sluggish,” said Ilya Spivak, a senior currency strategist at DailyFx.
U.S. prosecutors on Thursday accused Chinese company Huawei of stealing trade secrets. Washington had placed the telecommunications equipment maker on a trade blacklist last year.
This also comes after the U.S. and China signed a “Phase 1” deal in an apparent thaw following a prolonged trade dispute, with focus now on negotiations for a Phase 2 agreement.
“Given it is an election year in the U.S., the consensus in the gold market is that the Chinese would do anything to make sure they don’t cause any further disruption to their economy, at a time when it is pretty vulnerable,” IG Markets analyst Kyle Rodda said.
Elsewhere, palladium rose 0.4 % to $2,433.36 per ounce and looked to register its best week in a month.
Silver gained 0.3% to $17.68, while platinum was up 0.2% to $969.28. (Reporting by K. Sathya Narayanan in Bengaluru; Editing by Bernard Orr)