Gold falls, before China’s attempt to contain the coronavirus

On Monday, the price of Gold prices closed at $1,580.8. Compared to Friday’s price in London, it lost about 0.60 dollars, which is 0.04%. Gold futures in the United States fell 0.08% to             $1,581.4 per ounce. Trading volumes were lower than usual due to a holiday in the United States.

Earlier, gold traded near a two-week high of $1,584.65 on Friday. However, it cut its rise before the advance of global exchanges. Besides, the central bank of China reduced interest rates on its loans to medium-term, to soften the economic blow due to the coronavirus. It eased investors and fueled demand for higher-risk assets.

George Gero, managing director of RBC Wealth Management, says that the scenario for the coronavirus is still unclear. Information about the situation is generating volatility in the stock markets. It is forcing investors to take refuge in gold. Even if the virus disappears, gold is expected to trade in the range of 1550 and 1600 dollars. After all, there still are uncertainties, such as the low-interest rates of leading central banks, tensions in the middle east, and other political risks.

China Announces More Stimulus Measures

To help prevent the impact of the coronavirus on the Chinese economy, the central bank of China, cut the interest rate on medium-term credit. The decision is expected to prepare the ground for a cut in the reference interest rate in the country. A rebound in the currencies of emerging markets could put pressure on the US dollar. A weaker US dollar is good for gold prices. This is because it usually favors the increase in foreign demand for gold, which is denominated in dollars. China is also planning to reduce taxes while increasing public spending, finance minister Liu Kun said on Sunday in the Chinese Communist Party magazine.

At the beginning of the month, the Chinese central bank reported that it would insert 1.2 billion yuan (about 174 billion dollars) of liquidity into the markets through operations of reverse repurchase agreements. The Dollar Index reached near the four-month ceiling in the previous session, making gold more expensive for holders of other currencies.

 

Japanese Yen gains with gold prices as coronavirus influences Apple outlook

 

On Monday, Apple announced that the company isn’t going to participate in meeting its $63b-67 billion revenue guidance for the March quarter. The reason is due to a slowdown in output and lower demand because of the ongoing coronavirus outbreak.

It is growing concerns that global economic growth could slow down further. On Monday, the Japanese fourth-quarter GDP suddenly shrunk at its most aggressive pace since 2014. China and Japan are the world’s largest economies. Their slowdown impacts the world, given their relatively high importance of trade when looking at their economic complexities.