Gold Prices Steady As Virus Spread Saps Global Risk Appetite

Gold prices slipped a little through Tuesday’s Asian session but held broadly steady, with market worries about the ongoing spread of Wuhan-strain coronavirus still keeping demand for anti-growth haven assets underpinned.

China’s death toll from the illness has reportedly hit 106, with 4,515 people infected with Reuters saying that Beijing has now seen its first death from the condition. The United States and Canada have joined the list of countries warning against travel to China.

Regional stock markets continued to fall with South Korea’s Kospi down nearly 3%

Global markets are also gearing up for the US Federal Reserve’s first monetary policy decision of 2020 which is coming up on Thursday morning Asia Pacific time. Key rates are expected to remain on hold, indeed the market thinks they may not move at all this year and investors will be keen to gauge the extent to which the Fed might agree with that thesis.

Crude oil prices looked set for a sixth day of falls as investors tried to gauge the extent to which the virus will hit demand at a time when energy markets are well supplied, both by traditional producers and US frackers.

With the effects of 2003’s Severe Acute Respiratory Syndrome (SARS) on world ravel in mind, many forecasters are trying to model what effects coronavirus might have on the price of a barrel of crude. Barclays has reportedly said that they could trim $2/barrel from its current $62 average forecast for Brent and its $57 call for US crude.

The Organization of Petroleum Exporting Countries (OPEC) isn’t scheduled to meet again until March but, should signs that the outbreak is hitting global demand grow, speculation that production cuts could be deepened or extended will probably grow with it.

Assuming viral headlines permit, the market will look ahead to US durable goods order data due later in Tuesday’s global session, and weekly inventory numbers which are coming up on Wednesday.

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