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Gold futures were trading slightly lower Thursday but holding above an important technical level as investors watched the spread of a fast-moving influenza from China to Singapore during Lunar New Year, a key travel and gold-buying period in the Asian region.
Market participants were also digesting monetary policy from European Central Bank President Christine Lagarde.
The European Central Bank, as expected, left interest rates unchanged on Thursday and maintained its commitment to purchasing 20 billion euros ($22.8 billion) a month in bonds. The ECB’s deposit rate stands at -0.5%, while its main refinancing operations rate holds at 0%. Lagarde is holding a news conference, which started at 8:30 a.m. Eastern Time, where commodity investors will be waiting to see if adopts a less accommodative monetary-policy posture than her predecessor Mario Draghi.
In a statement, the ECB repeated that its Governing Council expects rates to remain at present or lower levels until there are solid signs stubbornly low inflation is on track to converge with the bank’s target of near, but below, 2%.
“The statement leans a bit easy on monetary policy as it said the ECB’s bond-buying program will continue ‘as long as necessary,’” Jim Wyckoff, senior analyst at Kitco.com, told MarketWatch.
Gold prices likely will remain in focus to hold above a level of support at $1,550 an ounce, amid reports that the coronavirus has spread to further outside of China, which has expanded lockdowns.
Singapore on Thursday confirmed its first case of the illness, the Channel News Asia reported.
On Thursday, Beijing locked down additional cities in an effort to contain the spread of the disease. Chinese officials have so far locked down Huanggang, a city of 7.5 million people, while a smaller city Ezhou, with population of million, said it also would restrict travel, the Wall Street Journal reported. Those lock downs follow reports earlier that officials in Wuhan, a city of 11 million people, had instituted travel restrictions.
Thus far, the outbreak has sickened more than 500 people in China and claimed at least 17 lives, according to official reports.
Meanwhile, WHO said its emergency committee on Wednesday was split as to whether to declare the new coronavirus a public health emergency of international concern and will meet again on Thursday “given the rapidly evolving situation.”
Gold tends to gain during periods of market fear but the metal also faces pressure from worries that physical buying will be harmed by the outbreak.
Against that backdrop, Gold for February delivery GCG20, -0.10% on Comex was trading $1, or 0.1%, lower at $1,555.70 an ounce, after sliding less than 0.1% on Wednesday. March silver SIH20, -0.77% was last down 14 cents, or 0.8%, to $17.670 an ounce.
“Industrial metals will trade with a softer bias on global spread of coronavirus,” Chintan Karnani, chief market analyst at Insignia Consultants, told MarketWatch. “Some concrete statement from World Health Organization (WHO), if any, will affect all metals and energies,” he wrote.
Industrial metal copper was trading lower. March copper HGH20, -0.65% was off 0.5% at $2.751, after shedding 1% on Wednesday.
Karnani noted that China’s markets will be closed from Friday to Jan. 30 for the holidays.
