By Administrator_India,
Gold prices climbed more than 2% on Monday to their highest since February 2013, as a spike in coronavirus cases in several countries outside China heightened worries about a hit to global economic growth, prompting a flight to safe havens.
Spot gold was up 1.1% at $1,661.86 per ounce by 0304 GMT, after climbing to $1,678.58 earlier in the session. U.S. gold futures rose 1% to 1,664.60.
“The thinking is that fewer people are holding shares, selling down in particular, and that money has to fall into havens,” said Michael McCarthy, chief market strategist at CMC Market.
“The impact on the global economy also means we will likely see a lower interest rate environment for longer.”
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.
Global equities extended losses as concerns about the spread of the virus beyond China grew with sharp rises in infections in Italy and Iran, while South Korea raised its infectious disease alert to its highest level.
The World Health Organization’s remark that it is worried about the growing number of cases without any clear link to China, was also a cause of concern for the market.
Among other safe havens, the U.S. dollar .DXY edged higher as the rapid spread of the new flu-like virus drove fears of a pandemic, while the benchmark U.S. 10-year Treasury yield hovered close to its lowest since early September.
The Japanese yen further backed away from its lowest since April 2019 against the U.S. currency.
Apart from speculative positioning, financial uncertainty and low interest rates are also bolstering demand for gold, Phillip Futures analysts said in a note.
Speculators raised their bullish positions on COMEX gold and silver contracts in the week to Feb. 18, the U.S. Commodity Futures Trading Commission said on Friday.
