Gold prices surged higher on Monday afternoon in Asia as global health officials confirmed a wider global reach of the coronavirus that had recently been thought to be contained mostly in Asia. Gold futures were up 0.94 percent as of 1:57 p.m. HK/SIN, to $1,664.20 per ounce after hitting seven-year highs last week. In contrast, oil futures slumped dramatically, with U.S. WTI futures sliding 2.34 percent to $52.13 per barrel and Brent crude futures down 2.5 percent to $57.04 per barrel as traders worried that global trade would be halted by the spread of the virus.
China’s National Health Commission reported 409 new cases as of Monday, with 150 fatalities for the day. South Korea’s government raised its alert level to the highest level after the country’s cases surpassed 700, with 7 deaths thus far. There has also been a spike in cases in Italy after 150 new cases were reported over the weekend. Four new cases were reported in England. Travel restrictions continue worldwide, with the cancellation of flights between South Korea and several Chinese cities, and the halting of train service between Austria and Italy. With 43 cases confirmed in Iran, travel restrictions have been imposed on the Islamic Republic by Iraq, Turkey, Afghanistan, Saudi Arabia, and Kuwait.
Interestingly, the Japanese yen, long thought to be a popular safe haven currency, hasn’t seen buying at the levels that fundamental analysts would expect. The dollar edged higher against the yen on Monday afternoon, up 0.01 percent to 111.58. The dollar also strengthened against the British pound and the euro, which eased 0.255 percent and 0.24 percent respectively against the greenback. The dollar strengthened 1.7 percent last week and is up 2.7 percent year to date despite concerns about a global economic slowdown that were prompted by the coronavirus.
Analysts expect that the coronavirus will continue to dominate headlines and influence trading decisions, and that Q1 earnings reports will likely show declines due to the virus. A slew of earnings reports are due out in the U.S. this week, but Wall Street benchmarks are expected to open lower on Monday due to coronavirus contagion fears and declines across all Asian benchmarks on Monday.