Gold prices dipped on Tuesday as the dollar held firm and investors opted for riskier assets after a fall in the number of new confirmed cases of coronavirus in China eased some of fears over global economic impact.
Spot gold was down 0.3% at $1,567.26 per ounce by 1:43 p.m. EST, having touched its highest since Feb. 4 at $1,576.76 on Monday.
U.S. gold futures settled down 0.6% at $1,570.10 an ounce.
“Gold is slightly down in tandem with another round of new highs across the board in equity markets, as there has been some conversation that the impacts from coronavirus are slightly overdone,” said David Meger, director of metals trading at High Ridge Futures.
However, “dips in gold are still being fairly bought very readily … given the strength seen in global equities and the fact that gold continues to hold up so well.”
Global financial markets scaled new highs as the number of new coronavirus cases slowed in China and the country’s factories slowly returned to work.
After more than 1,000 deaths, the China’s foremost medical adviser on the epidemic said infections may be over by April, with the number of new cases already declining in some places.
Further limiting gold’s appeal, the dollar hit a four-month high against a basket of rivals on safety buying and Federal Reserve Chair Jerome Powell’s upbeat view of the U.S. economy.
The U.S. central bank kept benchmark interest rates unchanged at its January policy meeting, citing moderate economic growth and a strong jobs market.
But in testimony before a U.S. congressional committee, Powell cited a potential threat from the virus and concerns about the economy’s long-term health.
“Gold’s longer-term bullish backdrop will remain primarily supported on physical demand from central banks and rising risks to the global growth that will trigger another wave of worldwide stimulus,” Edward Moya, a senior market analyst at broker OANDA said in a note.
Gold, which is used as an insurance against economic risks, tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
Among other precious metals, palladium fell 0.6% to $2,339.26 an ounce, silver dropped 0.7% to $17.63, while platinum rose 0.9% to $969.43.
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