Virus fears keep the yellow metal supported as traders bet on big dose of stimulus
Bengaluru — Gold prices rose for a second straight session on Tuesday, as expectations grew for monetary policy easing by central banks to cushion the economic fallout from the fast-spreading coronavirus outbreak.
“Expectations that major central banks around the world are going to aggressively cut rates, which is the sentiment at the moment ... supporting gold,” said Jeffrey Halley, a senior market analyst at Oanda, adding that virus fears kept the metal supported. The European Central Bank joined the chorus of central banks signalling readiness to deal with the economic effects of the outbreak. Lower interest rates reduce the opportunity cost of holding non-yielding bullion and weigh on the dollar, making greenback-denominated gold cheaper for investors holding other currencies.
Gold is moving along with equities as investors re-establish positions after liquidating them last week to meet margin calls in other assets, said Oanda’s Halley, adding that lower US Treasury yields also supported the metal.Meanwhile, data released on Monday showed US factory manufacturing activity slowed last month as new orders contracted, reflecting worries about supply-chain disruptions due to the virus outbreak and underscoring the need for an interest-rate cut.
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