By Barani Krishnan
Investing.com – Gold hit a one-week high ahead of testimony from Federal Reserve Chairman Jerome Powell, which should include how the central bank plans to shield the U.S. economy from China’s widening coronavirus crisis.
Both bullion and futures of gold rose for a fourth-straight session on Monday, the eve of a two-day testimony to Congress by Powell, who could give hints on whether the Fed might consider stimulus measures, or even rate cuts again, as precaution against the sharp slowdown in growth forecast for China, the world’s second-largest economy.
Gold futures for April delivery on New York’s COMEX settled up $6.10, or 0.4%, at $1,579.50 per ounce. It earlier rose to $1,580.45, its highest level since a Feb. 3 peak of $1,592.20 for April gold.
Spot gold, which tracks live trades in bullion, was up $5.72, or 0.4%, at $1,575.62 by 2:48 PM ET (19:48 GMT). The intraday peak for spot gold – $1,577.04 – was also the highest in a week.
“Gold continues improving as we await two days of testimony from Chairman Powell,” said George Gero, precious metals analyst at RBC Wealth Management in New York. “Most investors are looking at the question of whether rate cuts chances should be reduced by recent strong jobs numbers when the China crisis is getting worse.”
The U.S. added 225,000 jobs in January, exceeding economists' predictions for nonfarm payrolls. January's jobs report showed stronger signs than the average monthly gain of 175,000 jobs in 2019.
The coronavirus crisis has already killed more than 900 people and infected more than 41,000 in China, crippling whole industries in the No. 2 economy, before spreading to at least 25 countries. Goldman Sachs (NYSE:GS) has estimated that China's economy will suffer a 1.6-percentage-point reduction to first-quarter growth.
The Wall Street bank also expects the impact on China to reduce U.S. output by 0.4 percentage point to 0.5 percentage points, at an annual rate in the first quarter, with growth rebounding in the second quarter, leaving minimal impact on full-year growth.
The Fed cut interest rates three times in 2019, by a quarter-point on each occasion, before bringing that easing cycle to a close in December.