Gold hits record high of Rs 80300 per tola

Daniel Fowler
February 27, 2020

An ounce of gold became $44 more expensive in the worldwide market on Monday after the precious metal's demand soured in China and other countries plagued by the coronavirus.

While markets had largely brushed aside fears of long-term economic damage from the virus, a steady drip of new cases in countries beyond China has kept concerns alive.

Investors are also expecting global central banks to further ease monetary policy as the risks from the virus threaten global growth. The virus to date has been mainly focused within mainland China, and multinational businesses in the global manufacturing, retail and tourism industries have been concerned about its spread for quite sometime, as quarantine restrictions have a direct impact on factory slowdowns and travel in China, having the potential to decimate first-quarter earnings reports. Japanese markets were closed for a public holiday.

"There is lots of bad news on the coronavirus front with the total number of new cases still rising", AMP chief economist Shane Oliver wrote in a note.

It has unfold to some 28 different global locations and territories, with a demise toll of round two dozen, based on a 1 tally. US crude fell 3.8% to $51.35 per barrel and Brent was last at $56.18, down 3.97% on the day.

On Friday, US stocks were beaten down by concerns about the virus and after data showed American business activity stalled in February, signaling a contraction for the first time since 2016.

Investors' fears over the virus outbreak triggered a wide sell-off in equity markets. The manufacturing sector additionally clocked its lowest studying since August.

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The Australian greenback, thought of a liquid proxy for China performs, was down 0.4% as it languished close to an 11-year low.

That left the greenback index barely increased at 99.430.

Analysts expect the South Korean won to stay on its downward spiral against the USA dollar as one of the favourite risk proxies for investors. It was last down 0.9 per cent at 1,217.33 after hitting its weakest since August 2019.

Oil costs slid as traders fretted about crude demand being pinched by the influence of the coronavirus outbreak, whereas main producers gave the impression to be in no rush to curb output.

Earlier today, the precious metal slipped almost 2%, as markets resorted to profit-taking after the recent upsurge to a seven-year high of $1689.40.

"It is not as though the numbers have changed dramatically; but what has changed is the geography, which adds a new level of concern", said Art Hogan, chief market strategist at National Securities in NY.

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