Gold prices fell by 0.60 dollars by 0.04% on Monday, closing at $1,580.8 in London. Futures in the United States also inched down by 0.08% to $1,581.4 per ounce from lower trading volumes than usual in celebration of an American holiday.
The safe haven commodity traded a two-week high on Friday at around $1,584.65, which halted before global exchanges could advance.
China’s central bank reduced interest on its loans to medium-term last week, which softened economic blows brought forth by the coronavirus. The easing strengthened demand for higher-risk assets.
The ultimatum of the coronavirus remains unclear, according to the managing director for RBC Wealth Management, George Gero. More reports of the epidemic generate volatility in the stock markets, which could force investors to find refuge in gold.
China cut the interest on medium-term credit in hopes of hindering the coronavirus’s impact on the country’s economy. Investors expect the Central Bank of China’s decision to prepare the country of cutting reference interest rates.
Furthermore, China is planning to reduce taxes while increasing public spending, according to finance master Liu Kin in the Chinese Communist Party magazine.
Gold vs Economic Giants
Whether or not the coronavirus will end in coming months, gold is still projected to trade around 1550 and 1600 dollars. Uncertainties in world economies such as low-interest rates, tensions in the Middle East, and other political risks could still keep gold pumping.
Shares in Asia and Europe were mostly lower overnight alongside lower openings in US stock indexes. Risk aversion also influenced the slump.
Meanwhile, rebounds in currencies of emerging markets could put pressure on the US dollar. If so, it could strengthen amid stronger foreign demand for gold, since it’s denominated in dollars.
The Dollar Index reached near the four-month ceiling in the previous session. Which makes gold more expensive for foreign investors.
Apple announced cutting its 2020 guidance amid a slowdown in output and lower demand in the coronavirus outbreak. It initially expected its revenues to reach $63 billion to $67 billion in revenue by the end of March.
The New York Federal Reserve’s manufacturing index rose 8.1 points to 12.9 in February, prompting the highest level since May. The figure surpassed the expectations of a slight pullback.
Manufacturing on the east coast has yet to suffer impact following the COVID-19 epidemic. It enjoyed gains since the US and China signed a partial deal which intended to open Chinese markets to more American companies. This is in exchange for Beijing’s promise to buy an additional $200 billion worth of American goods and services.