Gold scales two-week high as coronavirus hits business

Gold climbed to a two-week high on Tuesday as investors sought safe havens after a revenue warning from iPhone maker Apple due to coronavirus, exacerbating fears of the outbreak’s impact on global economic growth.

Spot gold was up 0.4% at $1,587.06 per ounce, having earlier risen to its highest since Feb. 3 at $1,589.40. U.S. gold futures inched up 0.3% to $1,590.20.

“We’re seeing some renewed weakness in the stock markets following the announcement by Apple … it highlights that this (coronavirus epidemic) is not just an isolated event unfolding in China,” said Saxo Bank analyst Ole Hansen.

“It’s having a global impact on supply chains and shipments, this will have a negative impact on growth expectations,” Hansen added.
Gold is considered a hedge against risks from political and economic turmoil.
Apple’s warning that its sales would fall short sent shockwaves across markets and knocked global equities off their recent record highs.
Manufacturing facilities in China that produce Apple’s iPhone and other electronic goods have begun to reopen but are ramping up more slowly than expected, Apple said.

China had to extend Lunar New Year holidays, shut businesses, impose lockdowns and restrict transport to try to contain the outbreak.
Investors remain concerned about the further spread of the virus even as the number of new cases slowed, falling below 2,000 as of Monday.
Meanwhile, gold in euros hit an all-time peak of 1,468.54 euros per ounce.
The dollar rose to a more than four-month high against key rivals, also gaining from safe-haven interest.
“Dollar and gold are negatively correlated, but at this moment even though the dollar is moving higher, gold is moving higher, and that means demand for safety is outweighing the currency impact on gold,” CMC Markets analyst Margaret Yang Yan said.
Elsewhere, palladium gained 0.5% to $2,534.50 an ounce after hitting a near one-month peak of $2,546 earlier in the session.
“This can be only partly explained by the ongoing production problems in South Africa due to power supply disruptions and this year’s renewed high supply deficit,” Commerzbank analysts said in a note.
Silver rose 0.5% to $17.86, while platinum was up 1.1% to $979.50.