Gold Prices Climb As Coronavirus Worries Deepen, US Data Eyed

Gold prices climbed once again in Thursday’s Asia Pacific session as the coronavirus’ spread beyond China continued to shake markets, with conviction growing that its economic impact will be considerable.

US President Donald Trump made a speech on the subject aimed at reassuring Americans that the country will respond robustly and effectively to protect them from the outbreak. However, after days of heavy stock market falls, financial markets clearly expected more. Gold was among the counter-cyclical haven assets to make gains after Trump spoke.

The interest-rate environment worldwide is now more friendly to the non-yielding metal, with forecasts of lower borrowing costs ahead this year proliferating, including in the US. Treasury yields have already touched all-time lows in some cases.

Goldman Sachs has revised its 2020 price call to $1800/ounce, a $200 increase on its previous call.

For the rest of Thursday markets will look ahead to US durable goods order data. Much hope is now pinned on the US consumer as a growth engine with China mired in virus-related shutdowns and Europe growing only fitfully even before the disease hit.

The Federal Reserve’s Personal Consumption and Expenditure numbers are also due. As the Federal Reserve’s preferred inflation indicator these will command attention, with an unchanged annualized rise of 1.3% expected.

An official revision to Gross Domestic Product numbers for the final quarter of 2019 is also coming up. The market sees growth unchanged at 2.1% annualized.

CRUDE OIL PRICES CRUMBLE AS MARKETS FRET DEMAND LEVELS

Crude oil prices looked set for a fifth day of falls, returning Thursday to their lowest point since January 2019 as investors fretted the impact of the disease on demand for energy.

US crude oil stockpiles rose by more than expected in the week to February 21, according to data from the Energy Information Administration released on Wednesday, while the market still hopes that next month will bring production cuts from the Organization of Petroleum Exporting Countries and allies including Russia, the so-called ‘OPEC Plus’ group.

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