Gold Gains as Sentiment Sours

Gold future contracts moved higher on Monday during the Asian trade session as the widely traded spot contract is trading near a two week high price point. Traders are worried about the economic impact that the coronavirus will have on the global economy as it continues to spread.

As sentiment sours, safe haven inflows increase and asset classes like the yellow metal see capital inflows.

Trade volume was thin as many of the Asian and Pacific Rim markets were closed for the Chinese Lunar New Year Holiday. Financial markets in Australia, China, Hong Kong, Singapore, South Korea, and Taiwan are closed for public holidays.

The popular spot gold futures contact hit its highest price level since January 8 at $1,586.42 per ounce in early trading today. As of 1:30 am GMT, the spot contract was trading up 0.6 percent to fetch $1,579.94 per ounce.

U.S. gold futures, for front end delivery, also gained ground. This contract added half a percent to trade at $1,579.50 per ounce.

The spot silver futures contract added 0.9 percent to trade at $18.24 per ounce. The palladium contract shed 1.7 percent and the spot platinum contract lost 0.4 percent to trade at $997.25 per ounce.

Gold Gains even as the Dollar Index Moves Higher

The dollar index, which measures the greenback against six other currency units, was also trading higher. The index moved up from 97.783 to 97.826.

The Deadly Coronavirus continues to Spread

So far, the coronavirus, has infected over 2,000 people around the world. Most of these cases are in China as the new respiratory continues to spread. There are also confirmed cases in the United States and in other countries. Over eighty people have died.

The spread of the virus is already, according to preliminary economic data, impacting the world’s second largest economy.