By Peter Nurse
Gold prices fell sharply Tuesday, retracing after a positive January, as risk appetite grew on the back of the Chinese central bank showing its intent to support its economy given the damage caused by the coronavirus.
At 10:00 AM ET (1500 GMT), gold futures for April delivery on New York’s COMEX slid 1.4% to $1,560.95. Spot gold, which tracks live trades in bullion, was down 1.1%, at $1,558.63 per ounce.
Gold futures rose almost 4% for January, while bullion gained nearly 5%, the best performances for both since August.
Earlier Tuesday, the People's Bank of China stated it will inject a total of 500 billion yuan ($71.4 billion) into the money market to "maintain reasonable and adequate liquidity in the banking system during the period of epidemic prevention and control."
This helped Chinese stock markets close higher after Monday’s sharp losses and translated into gains in both Europe and early on Wall Street. Conversely, the yield on the United States 10-year benchmark Treasury rose 8 basis points to 1.60% as traders deserted this traditional safe haven.
Additionally, the dollar index, which tracks the greenback against a basket of six other currencies, pushed up 0.13% to 97.92. The dollar tends to have an inverse relationship with gold.
In fundamental news, India's gold imports in January plunged 48% from a year earlier to their lowest level in four months as the high prices curtailed purchases, Reuters reported Tuesday.
The world's second-biggest buyer of gold imported 36.26 tonnes in January, compared with 69.51 tonnes a year earlier.
