The prices of gold were almost unchanged on Monday as the release of positive economic data by the U.S. and China offsets the growing concerns over the impact of the coronavirus outbreak on the global economy.
Gold futures remained flat $1,572.70 an ounce while spot gold prices barely moved at $1,569.05 an ounce as of 0313 GMT.
The latest data released by the Chinese National Bureau of Statistics show a 0.1% increase in producer price index which temporarily reduced deflation resulting from the outbreak. Factory gate prices also increased for the first time in six months, though a positive momentum is unlikely because of the coronavirus epidemic.
In the U.S., data reveals a stronger-than-expected jobs growth in January. The economy added a total of 225,00 jobs, beating analysts’ predictions of only 160,000 jobs. The average hourly earnings also increased to $28.44, which is 3.1% higher compared to the same period of last year. The data lifted the U.S. dollar to its highest level in four months and this affected the pricing of the yellow metal.
The Asian stock market is still struggling because of the persistent fears over the impact of the coronavirus epidemic. The 2019-nCoV epidemic has already infected more than 40,000 and killed more than 900 people. It has already surpassed the death toll from the 2002-2003 SARS outbreak which also originated in China.
According to CMC Markets’ chief market strategist Michael McCarthy, the increase in China’s consumer and producer prices had a minimal effect on the precious metal. He said that the bullion is still supported by the uncertainty surrounding the outbreak because its economic impacts are still not clear and the number of infections and deaths continues to rise.
Stephen Innes, AxiCorp’s chief market strategist, added that investors are likely to maintain long gold positions and favor fixed-income investments until the economic impact of the outbreak becomes clear.
Meanwhile, the U.S. Federal Reserve has flagged some of the risks associated with the coronavirus. These include high levels of low-grade corporate debt and “elevated” asset values. The agency admitted that the American economy slowed down last year, but the possibility of a recession has faded.
In a related development, data shows that money managers and hedge funds have reduced their bullish stance in COMEX gold contracts for the week which ended on February 4, 2020. Also, the holdings of SPDR Gold Trust, the largest gold-backed exchange-traded fund in the world, has increased by 0.13% to reach its highest level since October 29 at 916.08 tons.