Virus uncertainty pushes up gold prices

Gold prices rose last week as investors bet on the safe-haven metal to hedge against the economic impact of the coronavirus outbreak. “The coronavirus scenario is still unclear and the on-off headlines … are making the stock markets volatile, forcing investors to take refuge in safe-haven gold,” said George Gero, managing director of RBC Wealth Management.

“Even with the virus gone, gold is expected to trade in the $1,550 to $1,600 range,” he said, “as other uncertainties like lower interest rates across the major central banks, Middle East tensions and other political risks still exist.”

The afternoon fixing on Friday in London was $1,581.40, compared with $1,572.65 a week earlier. In Thailand, the selling price of gold was quoted at 23,350 baht per baht-weight.

Global stock markets had a volatile week as investors took and then quit positions in riskier assets, driven by the frequently changing headlines around the coronavirus.

Further supporting gold’s rise, US treasury yields declined after soft retail sales data amid virus concerns.

US consumer spending appears to have slowed further in January, which raises concerns about the economy’s ability to continue expanding at a moderate pace.

Physical gold demand was tepid in major Asian centres last week, with premiums in China sliding to their lowest since July 2018, as the coronavirus epidemic dramatically slowed business activity.

Gold was selling at a premium of about $1 an ounce over benchmark prices in China, compared with $2.50 to $4.50 a week earlier.

In India, demand improved due to a jewellery exhibition, although near-record high prices capped retail demand.