By Geoffrey Smith
Investing.com -- Gold prices stabilized on Wednesday after a sharp fall on Tuesday in response to growing optimism that the impact of the novel coronavirus outbreak can be contained.
By 11:10 AM ET (1610 GMT) gold futures for delivery on the Comex exchange were up 0.4% at $1,561.35 a troy ounce, while spot gold was up 0.3% at $1,557.58. Both had fallen sharply on Tuesday amid a general risk-on move in global markets.
Sentiment had also taken a blow from further evidence that high prices are hurting end-user demand in the physical market. Bloomberg reported on Tuesday that India’s gold imports had fallen by more than 50% year on year in January to 21.7 metric tons from 45.9 metric tons a year earlier.
Reports of tentative progress in work towards drugs that can treat the coronavirus contributed to a further increase in risk appetite on Wednesday, pushing bond yields three to five basis points higher all along the U.S. Treasury yield curve.
Another factor behind that move was better-than-expected economic data out of the U.S., where payrolls provider ADP (NASDAQ:ADP) said the private sector created more jobs in January than in any month since May 2015. The Institute for Supply Management also reported that its non-manufacturing index of business activity rose to a five-month high of 60.9, defying forecasts for a drop to 56.5.
The ISM numbers echoed a rise in IHS Markit’s services PMIs, which helped the composite eurozone PMI to a four-month high of 51.3, adding to evidence that the region had put the worst of the trade-war-related slowdown in 2019 behind it.
Elsewhere, both European Central Bank President Christine Lagarde and Philip Lane talked up the hope that the impact of the coronavirus would be temporary, pouring more cold water on any nascent expectations of even more monetary stimulus from Frankfurt.
Central banks that still do have the scope to add stimulus are doing so, however. In addition to the People’s Bank of China’s actions earlier in the week, the Bank of Thailand cut its key rate unexpectedly earlier Wednesday.
Among other metals, silver futures rose 0.3% to $17.62 an ounce, while platinum futures rose 1.6% to $981.90.
Copper futures also found a bid, rising 1.2% to $2.57 a pound, and is now some 2% off the lows that it posted earlier in the week.