Gold inches down as WHO eases virus fears, but set for monthly gain

[BENGALURU] Gold prices eased on Friday after the World Health Organization (WHO) said measures taken by China could control the coronavirus outbreak and surveys showed signs of stabilisation in the world's second-largest economy.

However, the metal was up 3.7 per cent so far this month, set to post its best monthly gain since August, as the spread of the epidemic fanned fears of a slowdown in global economic growth.

Spot gold fell 0.1 per cent to US$1,572.96 per ounce by 0646 GMT, while US gold futures declined 0.7 per cent to US$1,578.30.

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".

"Although the WHO declared the virus an international emergency, they sounded relatively upbeat and didn't really endorse some of the things that the markets were worrying about... so markets took a little bit of solace there," said Ilya Spivak, a senior currency strategist at DailyFx.

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, this (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," Mr Spivak said.

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

Asian shares rose marginally as investors hoped that the Chinese epidemic will be contained soon, while surveys showing steady Chinese factory activity and firm services this month improved the mood further.

Further weighing on gold, the US dollar firmed against a basket of currencies, making bullion cheaper for holders of other currencies.

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

Palladium lost 0.1 per cent to US$2,307.02 an ounce. Prices were set to gain 19 per cent this month, the best since November 2016, but were down nearly 5 per cent this week.

Silver was flat at US$17.82 and down 1.4 per cent for the week, its worst since the week ended Dec 6. Platinum shed 0.1 per cent to US$976.16, and was on track to decline 2.5 per cent for the week, its steepest since early November.

REUTERS