Gold prices plummeted on Wednesday as the dollar firmed. Also, the statement from Chinese health officials eased investor fears of a global economic pandemic.
Spot gold price slipped by 0.4% to $1,551.90 an ounce. Last Tuesday, prices fell as much as 1% to their lowest since January 15 at $1,545.96. Then, U.S. gold futures also declined by 0.4% to $1,551.80.
Asian stock markets rebounded as China’s response helped in soothing concerns about the potential global fallout from the coronavirus outbreak. On the other hand, fears regarding a hit to domestic demand and tourism remained.
Geojit Financial Services head of commodity Hareesh V stated, “the dollar is steady, and there is apprehension that there will be less gold demand from China in the current year as well.”
For the first time in three years, China’s gold consumption was down in 2019. At the same time, high prices and an economic slowdown reached buying in the records in the world’s biggest market for the metal.
Also, China will begin to celebrate the Lunar New Year – a key gold-buying occasion in the region – from this weekend. But investors are thinking about the threat of contagion as hundreds of millions travel for the New Year Holidays.
In addition to that, the death toll from the flu-like coronavirus in China increased to nine on Wednesday, with 440 confirmed cases. Authorities were quick to step up efforts to control the outbreak by discouraging public gatherings in Hubei province.
Meanwhile, the dollar stood firm against a basket of other currencies. As a result, it made gold a lot more expensive for holders of other currencies.
Chief market strategist Stephen Innes explained, “Gold is struggling to gain momentum as positive equity market sentiment builds.”
He also added that hedge funds are still on the sidelines. And sovereign accounts that were active at the beginning of the year seems to be absent. The physical demand for the Chinese Lunar Year is weak too.
Spot gold, on the technical front, might meet again its January 14 low of $1,535.62 an ounce. Other precious metal palladium rose 1.1% to $2,427.51 per ounce. And silver fell 0.1% to $17.75 an ounce, while platinum jumped by 0.1% to $999.91.
Guar Seed Prices
On Tuesday, guar gum prices edged higher by Rs 18 to Rs 7,328 per fice quintal in futures trade. Also, investors added their holdings on spot demand.
Analysts are saying that raising bets by traders after a firm trend in the physical market mostly led to the boost in guar gum prices.
Then, on the National Commodity and Derivatives Exchange, guar gum contracts to deliver in February rose by Rs 18 or 0.25 percent. It is currently trading at Rs 7,328 per five quintal with an open interest of 54,985 lots.
Likewise, for March delivery, guar gum gained by Rs 12 or 0.23 percent. And it is trading at 7,469 per five quintal in a business turnover of 59,130 lots.
Also, Guar seed gained Rs 18 to Rs 4,120 per 10 quintal in futures trade after participants widened their holdings fueled by a firm trend in the spot market.