After profit-taking and sales to cover other losses had put pressure on quotations on Friday, concerns about the economic consequences of the global coronavirus are prevailing again at the beginning of the week.
Gold is in demand as a “safe haven” after the overnight Chinese Caixin purchasing manager index fell to 40.3 points in February – the biggest drop ever. Analysts had only expected a decline to 46.1 points, after 51.1 points in January.
The gold price also benefits from expectations that the Federal Reserve Bank (Fed) could lower interest rates to support the US economy. Fed chief Jerome Powell said the central bank would act appropriately and use the instruments to support the economy. Market observers interpret this as a signal for a rate cut. In addition, there is speculation on the market that the major central banks around the world could act together.
Low interest rates usually benefit the gold price because they make investments in the interest-free precious metal more attractive. At around 10:45 a.m.CET, gold was up 1,609.00 percent at xy US dollars per troy ounce.