Gold futures highlighted their most impressive numbers in more than two weeks Thursday, as the Wuhan virus scare ignited risk-off sentiment among investors.
News of the deadly coronavirus has pressured US equity output and stock markets around the globe while it lifted haven demand for the yellow commodity.
Michael Armbruster, managing associate at Altavest, disclosed to Market Watch that negative measures in US bonds have pushed Treasury yields down due in part to safe-haven acquisitions. The decline in treasury yields, Armbruster said, and the search for a safe haven asset, "have been very advantageous for gold."
Asia's stock markets were down as well, whereas US stocks traded on a dismal note late Thursday as gold futures settled. The 10-year US Treasury Notes fell 3.8 basis points to 1.730 percent.
Comex gold delivery for February was up by $8.70, or 0.6 percent, to end at $1,565.40 per ounce. Based on FactSet figures, this was the most active contract settlement since January 7 this year.
According to Lukman Otunuga, FXTM senior market strategist, appetite for gold should remain buoyed by rising concerns about the coronavirus outbreak in China.
The widespread doubt is likely to escalate the route to safe haven investments with a gold-viewed short-term testing of $1568, analysts said.
During Lunar New Year, a key travel and gold-buying period in the Asian region, the fast-moving viral infection has now spread to Singapore. Channel News Asia announced that Singapore confirmed its first case of the disease early Thursday.
Beijing locked down more cities on Thursday, in an effort to prevent the coronavirus from wreaking more havoc. The Wall Street Journal confirmed that Chinese officials have so far quarantined Huanggang, a city of 7.5 million people, while a smaller Ezhou city, with a population of millions, said that it would also limit travel.
Such lockdowns follow the latest updates that officials had imposed travel restrictions in Wuhan, a town of 11 million people. To date, some 830 people have fallen ill in China caused by the pandemic in which 25 lives have been confirmed dead, based on latest reports.
During times of market panic, gold continues to benefit but the precious metal also faces pressure from concerns that the outbreak will hurt physical buying.
On the other side, Rob Haworth, senior US capital market analyst at Bank Wealth Management, said only macroeconomic rather than virus-driven is "the heaviest influence on gold."
As this developed, the European Central Bank kept its interest rates unchanged late Thursday and retained its pledge to buy bonds worth 20 billion euros ($22.8 billion) a month. The deposit rate of the ECB is -0.5 percent, while its primary refinancing rate is pegged at 0 percent.