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Jan. 28, 2020, 2:02 p.m. EST

Gold retreats from a more than 6-year high as traders assess China virus outbreak

Silver futures lose more than 3%; copper down 9 sessions

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By Myra P. Saefong and William Watts, MarketWatch


AFP/Getty Images

Gold futures ended with a loss on Tuesday, as investor worries over the spread of China’s coronavirus abated somewhat and prices consolidated, a day after prices rose to a more than six-year high.

Some upbeat economic data also put pressure on haven demand for gold. The U.S. consumer confidence index climbed to a five-month high of 131.6 in January from a revised 128.2 in the prior month. Earlier, separate data showed orders for durable goods surged 2.4% in December, thanks to military purchases, while business investment in the civilian part of the economy declined again. The data come ahead of the Federal Reserve’s monetary policy announcement due Wednesday.

While the strength in consumer confidence has impacted the gold, “we still think that we are not out of the woods” in terms of the economy, Naeem Aslam, chief market analyst at AvaTrade, told Market Watch. Any retracement in gold is “an opportunity to buy, as we maintain our target of $1600.”

Analysts have said gold and other havens remain likely to see support on adverse developments regarding the virus outbreak.

/zigman2/quotes/210034565/delayed GC00 1,584.00, -2.40, -0.15%

Gold for February delivery /zigman2/quotes/210035396/delayed GCG20 -0.08%  on Comex fell $7.60, or 0.5%, to settle at $1,569.80 an ounce, while March silver /zigman2/quotes/210316162/delayed SIH20 +0.06%  lost 59.8 cents, or 3.3%, to end at $17.458 an ounce.

Gold on Monday saw the highest close for a most-active contract since April 9, 2013, according to Dow Jones Market Data.

U.S. benchmark stock indexes moved higher on Wall Street Tuesday, a day after the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.09%  and S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.18%  suffered their biggest one-day declines since October on fears the coronavirus outbreak could undercut global growth.

Analysts said gold’s haven-like behavior was encouraging, noting that the metal at times has seen its appeal blunted during periods of panic selling in equities and other risky assets.

“We like that there has been no sign of the ‘throwing-the-baby-out-with-the-bathwater’ selling in gold that happened during some other equity market corrections. People on those occasions were taking profits after a rally in gold to pay for margin calls in other weak positions,” said Jasper Lawler, head of research at London Capital Group, in a note. “This time, so far at least, they are holding on to gold.”

Meanwhile, March copper /zigman2/quotes/210055491/delayed HGH20 +1.12%  fell 1.7 cents, or nearly 0.7%, to $2.5795 a pound, after suffering a loss of 3.3% on Monday. Most-active contract prices for the industrial metal have now posted declines for nine sessions in a row, the longest such streak of declines since the nine-session run of losses ended on Oct. 21, 2016, FactSet data show

“The pace of the drop in copper prices is a growing concern as futures are down more than 10% from the January highs and beginning to suggest that there are more underlying negative influences on risk assets than just the coronavirus,” analysts at Sevens Report Research wrote in Tuesday’s newsletter.

In other metals trading, April platinum /zigman2/quotes/210262726/delayed PLJ20 +0.22%  added $3.30, or 0.3%, to $995 an ounce, while March palladium /zigman2/quotes/210239659/delayed PAH20 +3.73%  rose $11.50, or 0.5%, to $2,185.10 an ounce.

In a report released Tuesday, analysts at Heraeus Precious Metals said they expect the “structural shortage of palladium” to continue to exist this year.

“Even if vehicle sales will decline, the higher catalyst loading in gasoline engines should more than compensate for the expected decline,” they said, with stricter exhaust emission standards in China and India indicating a higher demand for palladium. They expect prices for palladium to range between $1,800 and $2,800 in 2020.

Platinum, however, is expected to see a continued surplus this year, but a “slight increase in demand for use in oil refineries and higher demand for platinum as a catalyst metrical for chemical processes will be a ray of hope,” the Heraeus analysts said. They expect to see a platinum price range of $800 to $1,050 this year.

/zigman2/quotes/210035396/delayed
US : U.S.: Nymex
$ 1,581.40
-1.30 -0.08%
Volume: 22.00
Feb. 17, 2020 10:31a
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$ 17.75
+0.01 +0.06%
Volume: 20,696
Feb. 17, 2020 10:53a
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/zigman2/quotes/210598065/realtime
US : Dow Jones Global
29,398.08
-25.23 -0.09%
Volume: 232.55M
Feb. 14, 2020 5:06p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,380.16
+6.22 +0.18%
Volume: 1.67B
Feb. 14, 2020 5:06p
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US : U.S.: Nymex
$ 2.63
+0.03 +1.12%
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$ 970.90
+2.10 +0.22%
Volume: 4,320
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$ 2,403.10
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Myra Saefong is a MarketWatch reporter based in San Francisco. Follow her on Twitter @MktwSaefong. William Watts is MarketWatch's deputy markets editor, based in New York. Follow him on Twitter @wlwatts.

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