Gold Prices Down as Markets Eye Virus Headlines and US Payrolls

London (Feb 7)  Gold prices were a little lower in Friday’s Asia Pacific session, but they continue to hold up close to this year’s seven-year peaks as markets mull the likely impact of coronavirus’ spread as China’s President Xi Jinping declared a ‘people’s war’ against the disease.

While there are hopes that a vaccine against the Wuhan strain might be developed relatively quickly, and that in any case the disease seems less fatal than some of its predecessors, the contagion’s global footprint and death toll continue to rise, as does the economic disruption caused.  To cite one clear example of this disruption, Italian car maker Fiat has said it might have to shutter a major European factory cite because of the virus’ effects on its Chinese parts-supply chain.

In this environment it seems unlikely that haven assets such as gold can have far to fall, but the short-term market will probably be dominated by the wait for official US payrolls data, due later on Friday, and China’s willingness to lift tariffs on some US goods. That was announced on Thursday but continues to support risk appetite.

Economists are looking for 160,000 new non-farm jobs for January. This would be a rather ‘so-so’ outcome but, given December’s lowball 145,000 rise anything close to or better than expectations might see a sigh of relief echo out across the markets, assuming virus-related headlines will permit. Recent US data releases have been quite positive, though, so hopes may be high that payroll forecasts can be topped.

DailyFX