Precious Metal – Spot gold fell 0.2 per cent to $1,560.50 per ounce by 0131 GMT. For the week, prices were on track to gain 0.3 per cent. US gold futures slipped 0.4 per cent to $1,559.20.
Gold inched lower on Friday as investors opted for riskier assets after the World Health Organisation stopped short of declaring the China virus outbreak a global emergency, but the precious metal was on track to post a weekly gain.
GOLD FUNDAMENTALS REPORTS
The WHO said on Thursday that the new coronavirus that has emerged in China and spread to several other countries does not yet constitute an international emergency but it was tracking its evolution “every minute”.
Asian shares were slightly higher following the WHO statement.
China’s Lunar New Year celebrations have begun as hundreds of millions are expected to travel to the country for holidays, raising fears of spreading the virus.
Weighing on bullion, the dollar against a basket of currencies, hovered near a one-month high hit in the previous session after the European Central Bank kept interest rates unchanged at its latest policy meeting.
Investors are now focused on the US Federal Reserve’s first meeting of the year scheduled on Jan. 28-29.
US President Donald Trump will sign a trade pact between the United States, Mexico and Canada on Wednesday, an administration official told Reuters on Thursday.
Holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.2 per cent to 900.58 tonnes on Thursday.
A significant global upturn will remain elusive this year as many economies still face an array of daunting risks, despite improved sentiment from an initial US-China trade deal and ebullience in financial markets.
Today, you need little over two ounces to buy the market. The ratio was the same in September 2007 when an ounce of gold could be picked up for less than $600.
The average over the long term – and we’re talking 90-years here – is 1.31.
Since the US left the gold standard entirely in August 1971, it’s 1.55. That implies a fair value for gold north of $2,400 an ounce, which either means gold bugs’ party has only begun or stocks are in for a real beating.
You can argue that during gold’s spike in 1980 to $850 an ounce – in inflation-adjusted terms still the all-time high – it lost touch with stock values (and some would say reality) entirely.
But the recent peak – when gold hit a record around $1,900 an ounce in 2011 – did not constitute a wild deviation from the norm, and based on relative value could be in reach once again.
