Gold eases off 2-week peak as dollar steadies

• Spot gold was down 0.3pc to $1,556.49 per ounce by 1215 GMT, after hitting its highest since Jan. 8 at $1,568.35 earlier in the session.
• US gold futures fell 0.2pc to $1,556.60 per ounce.
• The dollar held near the highest level in nearly a month, making gold expensive for holders of other currencies.

Gold fell on Tuesday, easing off a two-week peak, as the dollar steadied near a one-month high, although concerns of the economic fallout from the coronavirus in China kept prices above the $1,550 an ounce level.

Spot gold was down 0.3pc to $1,556.49 per ounce by 1215 GMT, after hitting its highest since Jan. 8 at $1,568.35 earlier in the session.

US gold futures fell 0.2pc to $1,556.60 per ounce.

The dollar held near the highest level in nearly a month, making gold expensive for holders of other currencies.

A coronavirus outbreak that began in the central Chinese city of Wuhan sent ripples through financial markets, as the World Health Organization called a meeting for Wednesday to consider declaring an international health emergency.

Bullion is considered a safe asset during times of financial and political uncertainty.

"Chinese New Year holidays are going to worsen the situation as people are bound to travel in China. The fear of outbreak is going to drive up demand for gold for a couple more days," said Margaret Yang Yan, a market analyst at CMC Markets.

China will start celebrating the Lunar New Year this weekend.

"However, it is hard to see gold progressing above $1,600 an ounce until the health emergency in China escalates sharply and becomes a regional problem," Jeffrey Halley, senior market analyst, OANDA, said in a note.

On the physical side, China's gold consumption fell for the first time in three years in 2019, figures released by the country's gold association showed on Tuesday, as high prices and an economic slowdown hit buying in the world's biggest gold market.

Markets also kept a tab on developments in the World Economic Forum in Davos and awaited the European Central Bank's first policy meeting of the year this week.

Palladium fell 1.4pc to $2,464.14 per ounce. The auto-catalyst metal hit a record high of $2,582.19 in the previous session.

Silver fell 0.4pc to $17.99, while platinum edged 0.5pc lower to $1,010.25 per ounce.