Fundamental Comment

Gold hits second highest level this year on corona concern

Gold hits second highest level this year on corona concerns

Gold prices rose during Wednesday’s trading, to record near its highest level in 7 years with losses of U.S. shares as a result of Apple's warnings and amid concerns about the negative repercussions of the coronavirus.

As of 08:17 GMT, spot gold hovered around $1,607.05 an ounce, which considered the second highest level this year and close to the highest level since March 2013, where the precious metal extended its gains after the breakout of resistance at $1588.

Gold's gains came after the notable losses incurred on Wall Street last night, as the Dow Jones lost 0.56 percent and the S&P 500 dipped 0.29 percent, while the Nasdaq Composite soared 0.016 percent.

Investors' desire to acquire safe haven assets was renewed after Apple confirmed that it was unlikely to meet its sales target within the first 3 months of this year, due to the impact of the Coronavirus on production and demand in China.

Gold is considered a classic safe haven in times of crisis or economic, political and geopolitical uncertainty, and therefore it managed to resume its advance from $1547.50 hit on February 5.

In terms of corona developments, the Chinese government has confirmed more than 72,400 infected cases and 1,868 deaths in China to date.

The gains of the yellow metal came despite the rise in the dollar to the highest level in 5 months, noting that the green currency is also treated as a refuge asset.

Meanwhile, the dollar index, which measures the performance of major six currencies against the US dollar, slumped by 0.02 percent at 99.31 after touching its highest level since September 2019.

Later in the day, the U.S. will release its producer prices and housing data, yet the key focus will be on the FOMC minutes, which provides in-depth insights into the conditions that influenced policymakers’ vote on interest rates.

As for other precious metals, palladium jumped 7 percent to trade above $2,820 an ounce after hitting a new record high at $2,843.50. Platinum added 1.75 percent to $1,009 an ounce, the highest since January 24 and spot silver edged up 1 percent to $18.35 an ounce.

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