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Gold inches lower as investors seek clarity on virus severity

Spot gold fell 0.2 per cent to $1,559.28 per ounce by 0748 GMT.

Last Updated: Jan 24, 2020, 03.52 PM IST
US gold futures slipped 0.4 per cent to $1,559.30.
Gold edged lower on Friday as investors sought details on the severity of the China virus after the World Health Organisation stopped short of announcing the outbreak as a global emergency.

Spot gold fell 0.2 per cent to $1,559.28 per ounce by 0748 GMT, but was on track to gain 0.2 per cent for the week. US gold futures slipped 0.4 per cent to $1,559.30.

"There is not enough information out there in the street yet to be sure that we have a negative situation on our hand and that it would require a move into havens," said Jeffrey Halley, senior market analyst, OANDA.

"It is also the eve of the Chinese New Year, so mostly it's just muted activity ahead of the holidays across Asia, with rising equities, earnings and stable US data weighing on gold."

Asian shares inched higher following the WHO statement on Thursday that the new China virus does not yet constitute an international emergency.

However, investors remained concerned about the spread of the virus ahead of the Lunar New Year, a peak period of travel and gold demand in the region.

Data on Thursday showed, the number of Americans filing for unemployment benefits increased less than expected last week, suggesting the labour market continues to tighten.

Further weighing on bullion, the dollar against a basket of currencies, hovered near a month high hit in the previous session after the European Central Bank kept interest rates steady on Thursday.

Investors are now focused on the US Federal Reserve's first meeting of the year scheduled on Jan. 28-29.

"With a low interest rate environment, geopolitical risks and uncertainties such as US President's impeachment, the conditions are still quite conducive to further upside in gold," ANZ analyst Daniel Hynes said.

Spot gold may retrace into a range of $1,551 to $1,554 per ounce, said Reuters technical analyst Wang Tao.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.2 per cent to 900.58 tonnes on Thursday.

Elsewhere, palladium dipped 0.8 per cent to $2,441.04 an ounce, and was on track to register its worst week in five, falling about 1.6 per cent.

Silver shed 0.1 per cent to $17.77 and was set to post its biggest weekly decline since early-December at 1.2 per cent. Platinum rose 0.2 per cent to $1,003.53, but was down 1.4 per cent for the week, its worst since the week ended Dec. 20.
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