The price of gold rose to its highest level in a week on Monday as the death toll from the coronavirus outbreak climbed and investors sought safe haven from the economic impact.
Spot gold was up 0.4% at $1,575.71 per ounce by 1:57 p.m. EST. Its session high was the highest since Feb. 4 at $1,576.76. U.S. gold futures settled 0.4% higher at $1,579.50.
“The coronavirus fears continue to see safe-haven inflows heading into gold and that has been positive for prices,” said Daniel Ghali, commodity strategist at TD Securities.
“At the same time, it is very crowded trade which means that rallies tend to be capped as people take advantage to off-load the metal for profits.”
Safe-haven gains for the U.S. dollar capped gold’s gains, as the dollar index scaled a four-month peak.
The death toll from the epidemic has surpassed that of Severe Acute Respiratory Syndrome (SARS) from 2002-2003 and the World Health Organization said the number of cases outside China could be just “the tip of the iceberg.”
Investors remained cautious even though Chinese authorities lifted some work and travel curbs, helping businesses to resume operations.
Since late last month, the world’s second-largest economy has suffered prolonged business closures, lockdowns and travel restrictions due to the outbreak that hit around the Lunar New Year holidays, a peak time for travel and business.
Bullion, seen as a safe investment during crisis, is off to a solid start this year, gaining nearly 4% so far in 2020 after an annual rise of about 18% in 2019.
Markets are looking forward to Federal Reserve Chair Jerome Powell’s two-day address to the U.S. Congress starting Tuesday, especially for commentary related to the China-linked virus.
The U.S. Federal Reserve kept benchmark interest rates unchanged at its January policy meeting, citing moderate economic growth and a strong jobs market.
Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.
On the technical front, “gold now faces the resistance level of $1,575, and a clear surpass of this level could open space for further rallies, with a first target of $1,600,” ActivTrades chief analyst Carlo Alberto De Casa said in a note.
Palladium climbed 1.2% to $2,343.89 an ounce, silver gained 0.8% to $17.81, while platinum dipped 0.3% to $962.04.
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