The coronavirus emanating from the Chinese city of Wuhan dominated global markets on the 23 rd of January. In spite of shut downs in a couple of cities in China, including Wuhan, this virus is fast approaching epidemic proportions globally. Initially thought to be bearish for the Chinese gold demand as cities were shut down, the safe haven status of gold was enhanced even as the virus spread to corners of the globe. Infected patients have been detected in the US, Saudi Arabia, Taiwan, South Korea, etc with more than 17 deaths so far.
The growing panic caused by the Wuhan virus has by and large aided the yellow metal. For, in such scenarios, cash is trash. It caused the Dow Jones to come off its recent highs and could impact the USD against most currencies.
In fact, gold opened lower in the morning and appeared to be sliding down as it faced headwinds. It opened in London at $1,554.05 (London am fixed). But, the spread of the virus and the ECB stance on not touching the interest rate at (-) 0.50% and easy monetary policy of continued bond buying helped gold recover and close in London at $1,562.9 per ounce (London pm fix). The yellow metal even tested the $1,568 per ounce resistance levels in New York trading but, ended in the $1,562-63 per ounce region on account of lower oil prices.
In stark contrast, the Indian gold market (blissfully unaware) opened marginally lower in Mumbai at Rs.40,068 per 10 gms and closed even lower at Rs.40,023 per 10 gms. Once again the stronger US dollar and a rebounding stock market caused the yellow metal to be subdued. Silver too followed gold as it opened lower at Rs.45,895 per kg and then slid further down to Rs.45,820 per kg, a loss of Rs.290. However, both the precious metals are likely to open higher on the 24 th following overseas trends.