Gold set for best week in more than a month

Bengaluru — Gold prices hit their highest in seven years on Friday and were set to post their best week in one-and-a-half months, as demand for the safe-heaven asset was boosted by a surge in new coronavirus cases in South Korea.

South Korea reported 52 new cases of the virus, taking the national total to 156, while Japan reported the first fatalities from aboard a cruise ship that accounts for the biggest cluster of infections outside China.

Spot gold rose 0.4% to $1,625.05/oz by 4.09am GMT, after hitting its highest since February 2013 at $1,626.27/oz earlier in the session. For the week, prices have risen 2.5% so far and were set to post their biggest weekly percentage gain since January 3. US gold futures were up 0.4% at $1,627.40.

“Main focus for gold seems to be the virus uncertainty … and it’s spread across the world,” said John Sharma, an economist at National Australia Bank, adding the epidemic’s effect on tourism, travel and growth was fuelling demand for gold.

Asian shares fell as news of increased infections in Beijing and abroad sent funds fleeing to the sheltered shores of US assets, lofting the dollar to three-year highs.

“Suddenly with the Korea situation, the Japanese ship and Singapore Airlines cutting a lot of their services, this is spreading some fear … not very encouraging in terms of growth, investment, consumer and business confidence,” Sharma said.

Further spread of the epidemic could derail a “highly fragile” projected recovery in the global economy in 2020, the IMF warned on Wednesday.

China cut the benchmark lending rate on Thursday to soften the effect of the virus on its economy and is likely to roll out more measures. Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.25% to 933.94 tonnes on Thursday, its highest since November 2016.

Spot gold may rise into a range of $1,639/oz-$1,667/oz, said Reuters technical analyst Wang Tao. Among other precious metals, palladium was flat at $2,689.06/oz, but was up nearly 11% for the week so far, set for its strongest week in over a month. The autocatalyst metal had risen to an all-time high of $2,841.54/oz earlier in the week on supply concerns. Silver was up 0.5% at $18.44/oz and was set to register its best week since  the week ended August 30, while platinum rose 0.2% to $980/oz. 

Reuters