Gold eases from near 2-week high on China stimulus
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Spot gold fell 0.3% to $1,580.27 per ounce, as of 1051 GMT. US gold futures shed 0.2 per cent at $1,583.30.
“While the optimism in stock markets is rather evident that this outbreak may be transitory and that a pivot point is near, however the gold investors are yet not willing to join whole heartedly in the equities game,” said FXTM market analyst Han Tan.
Gold earlier in the session was hovering near Friday’s near two-week high of $1,584.65, but pared gains as global shares rose after China cut the interest rate on its medium term loans in an attempt to counteract the economic hit from the epidemic. This comes after the country’s central bank in early February announced an injection of 1.2 trillion yuan ($174 billion) worth of liquidity into the markets.
The dollar hovered close to a four-month peak scaled in the previous session, making gold relatively expensive for holders of other currencies.
“Given that gold prices remain elevated above $1,500’s and that Asian currencies remain weaker to the US dollar it shows that there is still a fair amount of concern among investors about the potential fallout for the global economy from this outbreak,” Tan said.
Gold in euros hit a record peak of 1,463.98 euros per ounce earlier in the session.
The virus outbreak has claimed 1,770 lives so far and has threatened economic growth in the world’s second largest economy.
Major Asian financial hubs too are grappling with the impact from the virus as the public health crisis pushed Singapore to downgrade its 2020 economic growth forecast and has heightened the risk of recession in Japan.
“The main trend remains positive but for further rallies we would need some fresh impetus, as stock markets are still in a risk on scenario,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.
Reuters
