SINGAPORE – Gold is once again showcasing its long-standing reputation as an effective haven in troubled times, trading near the highest close in more than six years on rising concern over the economic and human impact of China’s deadly coronavirus. Miners’ shares advanced.
Bullion was steady after surging Monday as investors weighed the fallout from the spread of the disease, with Germany seeing its first case. As the death toll in China topped 100 and the number of cases soared, the director-general of the World Health Organisation is visiting Beijing to assess the response.
Bullion is up more than 4% in 2020, benefiting from the flight to haven assets, while equities have swooned along with industrial commodities. Investors are assessing the extent of the hit to growth in China, as well as further afield.
As the crisis unfolds, financial markets are also set to track Chairman Jerome Powell’s remarks following this week’s Federal Reserve rate-setting meeting.
The virus-driven “sell-off in equity markets will likely drive gold demand over the short term,” said Stephen Innes, chief market strategist at AxiCorp Financial Services. “The more rapid pace of contagion will represent another significant headwind to global growth, bullish for gold.”