GOLD PRICES rose $5 in London trade Monday as workers in China started returning to work after the New Year holidays, extended amid the coronavirus outbreak, and government authorities elsewhere warned of the risks it poses to growth, writes Atsuko Whitehouse at BullionVault. Gold prices touched $1575 per ounce at lunch time in London, while European shares dipped, following Asian markets lower as the official death-toll from 2019 novel coronavirus (2019 nCoV) rose to 908 – surpassing the 2002-03 SARS epidemic – with 97 more fatalities recorded on Sunday alone. Source of the outbreak, only China saw its stock market rise as the Communist Party lifted some work and travel restrictions, and the central bank provided special funds for banks to re-lend to businesses working to combat the virus. That expanded on last week’s measures from the People’s Bank to support the economy, including a cut to interest rates and flooding the money market with liquidity. “Because of the size of the Chinese economy, significant distress in China could spill over to US and global markets through a retrenchment of risk appetite, US Dollar appreciation, and declines in trade and commodity prices,” the US Federal Reserve says in its semi-annual report to Congress in Washington. “The effects of the coronavirus in China have presented a new risk to the outlook.” Back in gold, latest data from US regulator the CFTC show that hedge funds and other leveraged speculators in Comex gold futures and options cut their bullish betting as a group once again in the week-ending last Tuesday, when prices slipped to their lowest since mid-January, and also increased their bearish betting to the highest since June 2019. Overall, that slashed the net long position of Managed Money traders by 18% to the smallest in 8 weeks.
Atsuko Whitehouse is the Head of the Japanese Market at BullionVault and the Editor of Japanese GoldNews.
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