Gold rose on Thursday as a surge in the number of new coronavirus cases in China dashed hopes that the epidemic was slowing and drove investors to safe-haven assets. Spot gold XAU= was up 0.4 percent to $1,571.70 per ounce as of 0312 GMT. US gold futures gained 0.2 percent to $1,574.90.
"The unfortunate increase in number of cases in the Hubei province, which is ground zero... has affected risk-on sentiment," said John Sharma, an economist at National Australia Bank. Hubei reported 242 new deaths and confirmed 14,840 new cases as of Wednesday, a dramatic rise from the 2,015 new cases a day earlier after China began using a new clinical method for diagnosis.
Rise in the daily death count weighed on Asian equities
The fastest rise in the daily death count since the outbreak weighed on Asian equities but lifted the safe-haven yen JPY= from a three-week low against the US dollar. However, gold's rise was slow as the US dollar. DXY was hovering close to a more than four-month high scaled against key rivals in the previous session.
"It is more of a situation of capping gold's gain than having a major negative impact. With higher dollar index, the scope for gold to go much higher is limited," NAB's Sharma said.
Amid slowing global economic growth, negative Treasury yields and easing monetary policy around the world, investors are now looking for any information regarding the economic impact of the coronavirus epidemic. Meanwhile, Federal Reserve Chair Jerome Powell on Wednesday reaffirmed his confidence in the US economic outlook but said he expected some drag "soon" from the virus.
The US central bank had left benchmark interest rates unchanged in its latest policy meeting, citing moderate economic growth and strong jobs market, but cautioned a potential hit due to the outbreak. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.