Off The Wire
Gold near one-week low as coronavirus fears ease
(Updates prices, adds comments, details)
* SPDR Gold holdings jump to over three-month high
* Silver hits lowest since Jan. 29
* Dollar holds near four-month high
By Sumita Layek
Feb 12 (Reuters) - Gold prices inched down to a near one-week low on Wednesday as investors’ risk appetite picked up on reports of a decline in new coronavirus cases, although concerns over its impact on the global economy persisted.
Spot gold was down 0.1% to $1,566.31 per ounce at 1059 GMT, having touched its lowest since Feb. 6 at $1,561.16 earlier. U.S. gold futures were flat at $1,569.60.
Peter Fertig, an analyst at Quantitative Commodity Research, said a recovery in riskier assets like stock markets, and a stronger U.S. dollar were reducing gold’s safe haven appeal.
“The rate of (coronavirus infection) rises is getting slower ... it’s showing that an end of this epidemic is in sight,” he added.
World stocks rose, with European shares hitting record highs for the second straight session, on hopes the epidemic’s effects would be contained and on U.S. Federal Reserve chairman’s optimistic view of the economy.
China on Wednesday reported its lowest number of new coronavirus cases since late January, lending weight to a prediction by its senior medical adviser that the outbreak could end by April.
Further weighing on gold, the U.S. dollar held close to four-month highs, making assets priced in the U.S. currency more expensive for holders of other currencies.
Federal Reserve Chair Jerome Powell told Congress on Tuesday the U.S. economy was in a good place, but cited the potential threat from the virus epidemic and concerns about the economy’s long-term health.
Gold, which is often used as insurance against economic risks, tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
“Even though gold is range bound ... $1,600 is on the cards, but it may take a bit longer,” said Afshin Nabavi, senior vice president at precious metals trader MKS SA, pointing to unresolved geopolitical tensions such as in the Middle East and U.S.-Chinese trade frictions.
Reflecting investors’ interest in bullion, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.67% to 922.23 tonnes on Tuesday, the highest in over three months.
Among other precious metals, palladium slipped 0.7% to $2,324.39 an ounce, silver fell 0.3% to $17.58, having earlier hit its lowest since Jan. 29 and platinum shed 0.4% to $965.34. (Reporting by Sumita Layek in Bengaluru; Editing by Mark Potter)