Gold on track for best month in five as virus stifles risk appetite
New York (Feb 2) Gold prices rose on Friday and were heading for their best month in five as worries over economic growth due to the fast-spreading coronavirus boosted appetite for safe havens.
Supply-squeezed palladium, meanwhile, was on track for its biggest monthly percentage gain since November 2016.
Spot gold was up 0.6% at $1,582.94 per ounce by 12:15 p.m. EST (1715 GMT). The metal has gained more than 4% so far this month.
US gold futures edged 0.1% lower to $1,587.50.
“Coronavirus continues to be a strong factor of support as we are seeing global growth concerns hurting other markets across the board. As a result, we're seeing safe-haven demand drive into gold," said David Meger, director of metals trading at High Ridge Futures.
“Gold is the quintessential safe-haven asset that money managers are viewing as an alternative for cash."
The World Health Organization declared the epidemic a global emergency after the virus killed more than 200 people.
“At this point, it's not something the Chinese economy can shrug off. There will be a hit to growth, the magnitude of which will be difficult to chisel out in detail for quite a while," said Ilya Spivak, a senior currency strategist at DailyFx.
The virus fears gripped financial markets, overshadowing the latest batch of upbeat corporate earnings.
“Gold is both continuing to find favour as a traditional safe haven and, at the same time, run into strong resistance on the run-up to $1,600, which is keeping a lid on gains," OANDA analyst Craig Erlam said in a note.
On the physical side, however, an extended holiday in top consumer China due to the outbreak dimmed activity in Asian bullion hubs.
Auto-catalyst palladium, which is in short supply, has risen 18% so far this month, having hit a record high of $2,582.19 per ounce on Jan. 20. On the day, palladium was down 0.7% at $2,294.25.
“Palladium prices have really been in their own world… there is lot of demand for it in a tight supplied environment. We are seeing what industrial demand can do for prices," High Ridge Futures' Meger said.
Silver rose 1.1% to $17.91. Platinum dipped 2.1% to $957.21 and was on track for its worst week since early November.
Reuters
