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Gold Prices Rise as Virus Developments Keep Haven Demand Supported

Published 02/10/2020, 11:29 AM
Updated 02/10/2020, 11:33 AM
© Reuters.

By Geoffrey Smith

Investing.com -- Gold prices rose again on Monday, back toward their highest levels in a week, after dismal economic data from Europe reinforced demand for haven assets amid discouraging news flow out of China with regard to the coronavirus.

By 11:30 AM ET (1630 GMT), gold futures for delivery on the Comex exchange were up 0.3% at $1,577.45 a troy ounce, while spot gold was up 0.3% at $1,573.80 an ounce.

Silver futures were up 0.7% at $17.79, while platinum futures were down 0.3% at $966.80 an ounce.

Prices were supported by falling bond yields, notably in Europe, where the German 10-Year benchmark yield fell back below -0.40% after the biggest monthly drop in Italian industrial production in nearly 10 years. Similar data from the rest of the euro zone on Friday revived the specter of recession in Germany at the end of last year.

The data didn’t have the same effect on Italian government debt because signs of stress in the Italian real economy typically raise doubts about the ability of Italy to service its 2.5 trillion euro debt pile.

Price movements were held in check by consciousness that Federal Reserve Chairman Jerome Powell is due to start two days of testimony before Congress on Tuesday. The strong dollar also limited gains, as it hit a new four-month high against developed-market peers.

The patchy return to work by Chinese factories after a forcibly-extended New Year holiday has underlined how hard it will be for both production and consumption in the world’s second-largest economy to return to normal.

Reports suggest that workers returning to their workplace from other regions of China are being quarantined so that they can be screened before returning to work. Earlier Monday, Chinese media published an exhaustive study by some of the country’s top virologists that showed the incubation period of the disease could be as much as 24 days, rather than the 14 previously reported.

The death toll from the virus has now topped that for the SARS epidemic, and while official data suggest that the incidence of new cases may have peaked in China, reports of "superspreader" events traced back to Singapore suggest that new cases will continue to grow outside China for some time.

In all, the still-solid demand for haven assets among investors meant that gold-backed ETFs received over $1 billion in net inflows last week, according to data compiled by the World Gold Council. That’s down from the inflows seen at the start of the outbreak, but it’s still a new record for assets under management.

Elsewhere Monday, copper futures were fractionally lower at $2.54 a pound.

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