January 31, 2020 / 5:15 AM / a month ago

Gold inches higher on virus concerns; set for monthly gain

(Reuters) - Gold prices inched higher on Friday and were set to post their biggest monthly gain in five, as the coronavirus epidemic fuelled economic slowdown concerns, despite the World Health Organization’s confidence that the outbreak could be controlled.

FILE PHOTO: Gold bars and coins are stacked in the safe deposit boxes room of the Pro Aurum gold house in Munich, Germany, August 14, 2019. REUTERS/Michael Dalder

Spot gold rose 0.2% to $1,576.28 per ounce by 0756 GMT. The metal has gained 3.9% so far this month, on course for its best month since August. U.S. gold futures declined 0.6% to $1,580.10.

The WHO on Thursday declared the coronavirus outbreak a global emergency, however, it opposed restrictions on travel or trade with China and said the actions taken by Beijing can “reverse the tide”.

“Even as we saw some improvement in economic data and the WHO statement (showed confidence in China)... they are yet to come out with any vaccine for coronavirus,” said Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade.

“Underlying fears are there and dips will be used as a buying opportunity,” she said.

The new coronavirus has claimed 213 lives so far in China and has spread to at least 22 countries, while paralysing many provinces in the world’s second-largest economy with lockdowns, travel restrictions and closed businesses.

“At this point, it (impact from the virus) is not something the Chinese economy can shrug off, there will be a hit to growth, the magnitude of which will be difficult to chisel out in detail for quite a while,” said Ilya Spivak, a senior currency strategist at DailyFx.

Surveys showed steady Chinese factory activity and firm services this month, though this was likely before the virus took full hold.

Gold is considered a safe haven in times of political and economic uncertainty.

“Critical support remains in the $1,545-$1,550 regions with resistance at $1,585 and $1,600 an ounce. Wuhan fears should ensure that a break below $1,560 is very unlikely ahead of the weekend,” Jeffrey Halley, senior market analyst at OANDA, said in a note.

Palladium lost 0.4% to $2,302 an ounce. Prices were set to gain 18% this month, the best since November 2016, but were down 5.5% this week.

Silver rose 0.2% to $17.86 and was down 1.1% for the week, its worst since the week ended Dec. 6. Platinum shed 0.1% to $976.63, and was on track to decline 2.5% for the week, its steepest since early November.

Reporting by Sumita Layek in Bengaluru; Editing by Aditya Soni and Subhranshu Sahu

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