Gold slips from seven-year high

Bengaluru — Gold prices eased 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 China capped bullion’s losses.

Spot gold was down 0.2% to $1,657.40 an ounce by 3.33am GMT, after declining 1% earlier in the session. On Monday, the metal rose as much as 2.8% to its highest since January 2013 at $1,688.66.

US gold futures fell 1.1% to $1,658.60 an ounce.

“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, senior market analyst at Oanda.

“Now, we’re seeing bargain hunters come in to buy gold. There are increasing concerns that the virus is becoming a global issue now rather than being contained in China,” Halley said.

Asian equities were trying to stabilise 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 and authorities sealed off the worst-affected towns, closed schools and halted the carnival in Venice, while several Middle East countries were dealing with their first infections.

The rapid spread of the virus beyond China has heightened fears over its impact on the global economy, driving some bets that the US Federal Reserve will be pressed to cut rates to cushion the hit.

“A Fed cut in April, as our US economists expect, or further escalation in the Covid-19 outbreak is likely to propel the market higher and trade through $1700,” UBS said in a note.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

US treasury secretary Steven Mnuchin, meanwhile, said he does not expect the outbreak to have a material impact on the phase one trade deal with China, though that could change as more data becomes available in the coming weeks.

However, the Trump administration is considering asking legislators for emergency funding to ramp up its response to the epidemic, a White House spokesperson said.

Among other precious metals, palladium gained 0.7% to $2,647.06 an ounce. Silver slipped 0.3% to $18.58 an ounce, having touched its highest since early September in the previous session, while platinum inched up 0.1% to $964.46.

Reuters