Gold prices retreated on Friday as investors booked profits from a 1% jump in the last session, but the metal had some support as mounting concerns over the rapid spread of coronavirus lifted expectations of rate cuts by major central banks. Spot gold was down 0.7% at $1,630.86 per ounce by 0845 GMT. US gold futures slipped 0.6% to $1,631.90 per ounce.
"This virus is getting a lot more serious ... People are worried there might be a need for some more stimulus measures, so that means lower (interest) rates," said John Sharma, economist at National Australia Bank, adding that high prices prompted some profit-taking. Bets rose that the US Federal Reserve would cut interest rates as soon as next month to cushion the economy from the virus' impact.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion. Bullion has added almost 3% so far this month, its third straight monthly gain. Prices hit a 7-year high of $1,688.66 earlier this week. "On every dip we make, we are expecting a buy because the main trend for gold is still up," said Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade.
"Despite palladium having undergone some price corrections, it was much stronger than some expected, considering it's an industrial, rather than monetary metal," said Samson Li, a Hong Kong-based precious metals analyst at Refinitiv GFMS. "When sentiment is ruled by fear, investors always rush to cash and liquidity, and also sell profitable investments due to margin calls or to cover other investment losses."
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