Gold retreats from seven-year high, but virus fears limit losses
By Ritu,
Gold prices fell on Tuesday as investors booked profits from a jump to a seven-year high in the previous session and as equities regained some footing, but a spike in coronavirus cases outside of China capped bullion’s losses.
Spot gold was down 0.7% at $1,648.36 per ounce as of 0605 GMT. On Monday, the metal rose as much as 2.8% to $1,688.66, its highest since January 2013.
U.S. gold futures fell 1.6% to $1,650.60.
“S&P futures jumped and regional stock markets opened higher, so we saw a temporary bout of selling pressure come through on gold,” said Jeffrey Halley, analyst said.
Asian share markets found some stability after a wave of early selling petered out and Wall Street futures managed a solid bounce.
However, the coronavirus death toll climbed to seven in Italy on Monday, while several Middle East countries were dealing with their first infections.
While a rising dollar, which has also seen strong interest as a safe haven amid the outbreak, could temper gold’s rally, it is unlikely to “hold it back too much”, Patterson added.
The rapid spread of the virus beyond China has heightened fears over its impact on the global economy, driving some bets that the U.S. Federal Reserve will be pressed to cut rates to cushion the hit.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
U.S. Treasury Secretary Steven Mnuchin, meanwhile, told Reuters he does not expect the outbreak to have a material impact on the Phase 1 trade deal with China, although that could change as more data becomes available.
However, the Trump administration is considering asking lawmakers for emergency funding to ramp up its response to the epidemic.
On the technical front, gold may retest a support at $1,639 per ounce, according to Reuters analyst Wang Tao.
