Gold prices slid steeply on Tuesday and retraced some positive gains in January. Risk appetite recovered after the Chinese central bank said it would support the economy because of the damage the coronavirus is doing to the economy.
Gold futures for delivery in April on New York’s COMEX declined 1.4% to $1,560.95.
Spot gold was 1.1% at $1,558.63 per ounce in live trades in bullion.
Last January, gold futures increased by 4%. Bullion gained almost 5%, which was the best performance for both since August 2019.
In currencies, the dollar index tracking the dollar’s strength against a basket of other currencies, gained 0.13% to 97.92.
The buck typically has an inverse relationship with gold.
India’s gold imports in January plummeted 48% from a year earlier to their lowest level in four months as the high prices dampened purchases.
India is the world’s second-largest buyer of gold. In January, they imported 36.26 tonnes, which was a lot lower than 69.51 tonnes last year.
PBOC to Pump more Support to the Economy
Chinese policymakers are getting ready to impose measures to support the economy, which has been shaken by a coronavirus outbreak expected to have a devastating effect on first-quarter growth.
Sources said China was debating whether it would lower the 2020 economic growth target of around 6%. Previously, many private-sector economists see this figure as well beyond the country’s reach.
The death toll from the virus epidemic climbed to more than 420, and the risks are mounting.
As a result, China’s central bank is likely to decrease its key lending rate on February 20. It could also cut reserve requirement ratios in the coming weeks.
The People’s Bank of China (PBOC) has already injected hundreds of billions of dollars into the financial system this week to restore investor confidence.
Meanwhile, global markets are shuddering to the potential impacts of the virus on world economic growth.
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