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Gold Eases On Rising Risk Appetite As New Virus Cases Fall

Spot gold edged lower by 0.1% to $1,567.58 per ounce by 0642 GMT. U.S. gold futures edged 0.1% lower to $1,568.90.

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Gold prices edged lower on Wednesday as new coronavirus cases fell and risk appetite improved, although uncertainty over the economic impact of the outbreak still underpinned bullion.

Spot gold edged lower by 0.1% to $1,567.58 per ounce by 0642 GMT. U.S. gold futures edged 0.1% lower to $1,568.90.

While the death toll exceeded 1,100, China's foremost medical adviser on the epidemic said the infection may be over by April, with the number of new cases already declining in some places.

"Equity market is doing good, U.S. dollar is above 98.5 and there is some rebound in base metals and energy markets that is showing some increasing risk appetite in investors," said Vandana Bharti, assistant vice-president of commodity research at SMC Comtrade.

The U.S. dollar stayed close to four-month highs after soaking up safe-haven flows as worries about the coronavirus coincided with recent data showing the U.S. economy's strength.

"Gold is consolidating as the current virus scare is evaporating," Stephen Innes, chief market strategist at AxiCorp, said.

Meanwhile, Asian stocks inched up as investors felt the worst of the epidemic may have passed.

Innes said the measures taken by Chinese authorities to avoid large-scale layoffs were "keeping a lid on gold prices as it would be positive for growth and bullish for equity markets".

However, he said the underlying support for gold remains due to factors including the knock-on effects of the virus, the impact of existing tariffs following the U.S.-China Phase 1 trade deal.

Chinese purchase of U.S. farm products this year under the Phase 1 trade deal could drop, White House national security adviser Robert O'Brien said.

Meanwhile, Federal Reserve Chair Jerome Powell told Congress on Tuesday the U.S. economy is in a good place, but cited the potential threat from the epidemic and concerns about the economy's long-term health.

Gold, which is often used as an insurance against economic risks, tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.

Holdings of the world's largest gold-backed exchange-traded fund SPDR Gold Trust rose 0.67% to 922.23 tonnes on Tuesday, its highest in over three months.

Palladium was flat at $2,340.44 an ounce, silver fell 0.5% to $17.55, and platinum shed 0.1% to $967.77.


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