Gold costs surged greater than 2.5 per cent to over seven-year highs on Monday because the unfold of coronavirus outdoors China and its potential affect on world financial development spurred protected haven shopping for.
Spot gold was up 2.5 per cent to $1,683.94 per ounce at 0953 GMT after hitting $1,688.66, its highest degree since January 2013. US gold futures had been up 2.three per cent to $1,686.40.
Gold in euros hit an all-time peak of 1,560.39 euros per ounce, whereas gold priced in sterling rose to a file excessive of 1,308.20 kilos an oz.
“Beyond the near term disruptions to global supply chains, the coronavirus could have an effect on headline GDP,” mentioned FXTM market analyst Han Tan.
“On the onset of 2020 we were optimistic that global economic conditions were able to recover on signs of subsiding trade tensions, but the potential fallout from the coronavirus not only triggers risk aversion, but could also erode the growth potential for the full year.”
European shares tumbled greater than three per cent after a pointy rise in new infections in South Korea, Italy and Iran exacerbated worries of a wider unfold of the virus.
The World Health Organization mentioned it’s fearful concerning the rising variety of circumstances with none clear hyperlink to China.
“There seems to be a mix of short covering and a fear of missing out driving the gains (in gold), with $1,660 well supported on any pullbacks,” MKS PAMP mentioned in a word.
“Expect demand to remain firm through $1,660-$1,650, while there’s little top-side resistance on the way to $1,700.”
The US greenback additionally gained on rising curiosity in protected haven property.
The benchmark US 10-year Treasury yield fell to its lowest degree since July 2016.
Investors are additionally anticipating world central banks to additional ease financial coverage because the dangers from the virus threaten world development. Lower rates of interest cut back the chance price of holding gold and have a tendency to weigh on US. yields.
Reflecting elevated investor curiosity in bullion, speculators raised their bullish positions on COMEX gold and silver contracts within the week to February 18, knowledge confirmed on Friday.
Mirroring gold’s good points, silver rose 2 per cent to $18.82 an oz, having hit its highest since September at $18.90.
Palladium eased 0.four per cent to $2,691.75 per ounce, whereas platinum shed 0.1 per cent to $972.96.