Gold off a bit early Wednesday as the dollar strengthened, and investors seemed to dismiss concerns that a new coronavirus that began in China would cripple the global economy. Spot palladium decreased from a record yesterday, but has regained some ground this morning.
The U.S. dollar rose against a collection of currencies as the U.S. stock market rose overnight to a strong opening this morning with the NASDAQ and the S&P 500 hitting record highs on better than expected quarterly earnings from IBM.
The U.S. on Tuesday confirmed its first case of the coronavirus, which has already sickened hundreds of people and killed six in Asia, CNN reported. The virus first appeared in Wuhan, China, last month.
February gold futures slid 0.2% Tuesday to settle at $1,557.90 an ounce on Comex. U.S. financial markets were closed Monday for Martin Luther King Jr.’s birthday. The yellow metal gained 20 cents last week. Currently, the February contract is at $1,557.60
Equity markets rebounded early Wednesday after sliding Tuesday amid concerns about the potential for the virus to spread, particularly amid travel during the Chinese New Year holiday this weekend. Many markets in Asia will be closed Friday ahead of the holiday.
Chinese gold consumption dropped about 13% in 2019 from the year earlier — its first decline in three years — amid downward pressure on the economy and rising prices for the yellow metal in the second half of the year, Reuters reported, citing a statement Tuesday from the China Gold Association. China consumed 1,002.8 metric tons of gold last year, it said.
The International Monetary Fund on Monday revised down its growth forecasts for the global economy for 2019 and 2020, saying the outlook “remains sluggish.” The annual gathering of the world’s top leaders at the World Economic Forum in Davos, Switzerland, kicked off Tuesday, and comments from Davos could trigger market moves throughout the week.
U.S. President Donald Trump said in a speech at Davos on Tuesday that the U.S. is “in the midst of an economic boom the likes of which the world has never seen before.” In his own remarks in Davos, Treasury Secretary Steven Mnuchin said that the U.S. economy is “outperforming the rest of the world.” The presidents of the European Parliament and European Commission are scheduled to speak Wednesday, German Chancellor Angela Merkel is scheduled for Thursday and European Central Bank President Christine Lagarde for Friday.
In upcoming economic news, U.S. initial jobless claims are due out Thursday along with the Conference Board’s leading indicators.
Silver slid 1.5% last week to settle at $17.81 an ounce on Comex. The March futures contract decreased 0.2% last week. Currently, the March contract is up at $17.895. Spot palladium, a metal used primarily in autocatalysts, decreased 3.9% after surging 18% last week amid the ongoing global supply crunch. However, this morning, palladium has surged back up and is currently over $2,477. Spot platinum dropped 2.1% after advancing 4.4% last week.
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