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Gold Poised for Weekly Gain As Wuhan Coronavirus Spurs Safe-Haven Bid

January 24, 2020 at 17:53 by Andrew Moran

Gold futures are rising to close out the trading week, buoyed by the outbreak of the Wuhan coronavirus that has triggered investors’ dives into safe-haven assets. With many analysts fearful that the spread of the virus could hurt Chinese economic growth, equities are posting modest gains and sending traders into precious metals.

February gold futures rose $8.00, or 0.51%, to $1,573.40 per pounce at 16:24 GMT on Friday on the Comex division of the New York Mercantile Exchange. The yellow metal is poised for a weekly gain of more than 1%, lifting its year-to-date boost to more than 3.5%.

Silver, the sister commodity to gold, is also rallying to finish the trading week. March silver futures picked up $0.245, or 1.37%, to $18.075 an ounce. The white metal is on track for a tepid weekly increase of 0.2%, but it is still up 1% so far on the year.

The coronavirus is dominating international headlines after authorities confirmed that the virus has killed 26 people, and there are nearly 1,000 confirmed cases worldwide. In the US, the Centers for Disease Control and Prevention (CDC) announced that there are now two confirmed cases of the Chinese virus and officials are monitoring 63 potential infections.

With the world’s second-largest economy gradually rebounding from last year’s disastrous performance, investors fear that Beijing will suffer significant losses moving forward. This fear was justified when the federal government announced the cancelation of the Lunar New Year. Meanwhile, the city of Wuhan, where it is believed to have originated, is quarantine as nobody can go in or leave.

As one expert noted, the US picked the wrong time to start a trade war with China.

In addition to developments in the outbreak, gold will find direction in the Federal Reserve’s policymaking meeting next week. According to the CME Group FedWatch tool, the Federal Open Market Committee (FOMC) is widely anticipated to leave interest rates unchanged at a target rate of 1.50% to 1.75%.

In other metal markets, March copper futures tumbled $0.045, or 1.65%, to $2.68 per pound. February platinum futures rose $3.60, or 0.36%, to $1,010.90 an ounce. February palladium futures fell $31.30, or 1.34%, to $2,297.70 per ounce.

If you have any questions and comments on the commodities today, use the form below to reply.

2 Responses to “Gold Poised for Weekly Gain As Wuhan Coronavirus Spurs Safe-Haven Bid”

  1. Sagar

    What u think gold can go

    [Reply]

    Andriy Moraru Reply:

    It depends on the timeframe you are looking it. It can go quite well up in short-term (up to a few weeks), but I expect it to enter a downtrend down the line somewhere (in terms of months).

    [Reply]

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