Gold prices pushed through the important $1,600 per ounce mark on Tuesday and continued higher during Wednesday’s Asian trading session, boosted by concerns about the coronavirus’s impact on the global economy. Apple warned early this week that it will miss first quarter guidance due to a decrease in production and sales caused by factory and store closures in China. Analysts are concerned that Apple won’t be the only company to adjust its Q1 expectations and that the damage caused by China’s closures hasn’t yet been fully discovered.
Gold futures were up 0.156 percent as of 3:09 p.m. HK/SIN, to $1,606.10 per barrel on Wednesday. The surge in gold prices came shortly after the U.S. energy secretary tried to contain concerns and restore optimism to the market. Dan Brouillette told CNBC on Friday that “at this moment, while we are seeing some slight reductions in production as a result of the virus, we are not yet concerned about its ultimate impact.”
Oil futures were higher on Wednesday afternoon, with U.S. WTI futures up 0.75 percent to $52.44 per barrel, and Brent crude futures up 0.59 percent to $58.09 per barrel. Brouillette brushed off the reality that both OPEC and the International Energy Agency have downgraded their forecasts for demand in 2020. OPEC members have met to discuss whether they should reduce output more than originally planned, but a decision hasn’t yet been taken to resolve the issue.
Factories in China have begun to open, and a decline in the daily death toll and the number of new cases has given both analysts and traders optimism that the peak of the virus has passed. On Tuesday, Chinese officials reported 98 deaths from the coronavirus, the first time the death toll dipped below 100 in a week. Nevertheless, NIH immunologist Anthony Fauci has hinted that the optimism may be premature and that the decline in numbers may be a natural variation rather than a confirmed peak to the virus. WHO Director-General Tedros Adhanom Ghebreyesus supported Fauci’s claims and noted that while there is reason to be hopeful, the data must be interpreted cautiously.
The dollar index dipped modestly on Wednesday afternoon, trading down 0.02 percent to 99.42. The dollar edged up against the yen, gaining 0.2 percent to 110.08. the pound also eased against the greenback, down 0.023 percent to $1.300.