Gold holds above $1600 on fears over economic impact of virus

By  Administrator_India,

Capital Sands

Gold prices held steady above the key $1,600 mark on Wednesday as an uptick in equities due to a drop in new virus cases was kept in check by fears about the economic fallout of the epidemic.

Autocatalyst metal palladium, meanwhile, scaled yet another record peak on a sustained supply shortfall.

Spot gold was little changed at $1,601.77 per ounce by 0244 GMT. In the previous session, bullion prices surged 1.3% to their highest since Jan. 8 at $1,605.10.

U.S. gold futures were up 0.1% to $1,604.80.

Asian shares and U.S. stock futures edged cautiously higher as investors tried to shake off worries about the epidemic.

“The big wave of risk-off has sort of dissipated right now, but still the economic fallout is buttressing the demand for gold,” Stephen Innes, chief market strategist at AxiCorp.

The increase in the number of new virus cases slowed in China’s Hubei province even as the death toll rose by 132 as of Tuesday.

The U.S. dollar .DXY, also considered a safe-haven during times of economical and political uncertainties, stayed above the more than four-month high against key rivals.

Investors will closely read the minutes of the Federal Reserve’s Jan. 28-29 policy meeting, which is due at 1900 GMT.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and also weigh on the U.S. currency.

Indicative of investor sentiment, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.6% to 929.84 tonnes on Tuesday, their highest since Nov. 11, 2016.

Plagued by sustained supply deficit, palladium, used mainly in catalytic converters in vehicles, rose about 54% in 2019.