Gold Prices Remain Muted as Investors Eye Fed, Coronavirus

Gold prices have been relatively muted as investors are reading into Federal Reserve Chairman Jerome Powell’s neutral tone on the economy and the remaining wild card in the markets known as the coronavirus.

Gold prices are slowly facing downward pressure as a risk-on sentiment creeps back into the markets following lesser cases of the coronavirus occurring. The major stock market indexes are back on their path to new highs after hitting the virus outbreak speed bump.

Per a Kitco news report, “Powell said that U.S. economic activity has increased at a moderate pace even as risks to the global economy remain. Tuesday is the first day of Powell’s testimony before Congress. His opening statement was released ahead of his appearance before the House Committee on Financial Services.”

As far as interest rates are concerned, Powell mentioned that the 2% inflation target remains as current monetary policy continues to support growth. In 2019, the central bank instituted three consecutive rate cuts in a shift to easing and stood pat at the last interest rate policy meeting last month.

“As long as incoming information about the economy remains broadly consistent with this outlook, the current stance of monetary policy will likely remain appropriate,” Powell noted.

As far as coronavirus concerns go, the global health of the economy is the primary point of concern.

“We are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy,” Powell added.

“Powell noted that while GDP and particularly consumption growth slowed last year, the recent trade truce with China and signs of improvement in the global economy had reduced some of the uncertainties around the outlook,” said Andrew Hunter, senior U.S. economist at Capital Economics. “While the markets are apparently convinced that the virus will force the Fed to cut rates again by year-end, the likelihood of a US epidemic now appears low.”

Investors looking to get in on gold can look at funds like SPDR Gold Shares (NYSEArca: GLD) and the SPDR Gold MiniShares (NYSEArca: GLDM). Precious metals like gold offer investors an alternative to diversify their holdings, and like other commodities, gold will march to the beat of its own drum compared to the broader market.

Traders looking for leverage can use funds like the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT), VanEck Vectors Gold Miners (NYSEArca: GDX)and the Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG).

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