Gold futures have been declining steadily in recent sessions, but they finally ticket higher on Thursday after reports out of the Hubei province in China showed a dramatic spike in the death toll due to the coronavirus. 242 people died on Wednesday, more than doubling the highest death count until now, which was 103 deaths on February 10. The yen also edged higher against the dollar after traders shunned the safe-haven currency in recent sessions. The greenback was down 0.273 percent against the yen to 109.78.
On Wednesday, OPEC downgraded its global outlook for oil demand based on the threats to the supply chain coming from the coronavirus and the factory closures in China. OPEC reduced its demand predictions by 0.23 million barrels per day to 0.99 million barrels per day. CNBC analysts have predicted that the reduction in demand expectations will prompt OPEC and its allies to implement additional production cuts in the not-too-distant future.
“The impact of the Coronavirus outbreak on China’s economy has added to the uncertainties surrounding global economic growth in 2020, and by extension global oil demand growth in 2020,” OPEC said in the report.
Brent crude futures were down 0.6 percent to $55.66 per barrel as of 2:31 p.m. HK/SIN, and U.S. WTI futures were down 0.02 percent to $51.16 per barrel.
Optimism Fades
Analysts had begun to think that the coronavirus had peaked thanks to a declining number of new cases for several days this week. However, another 14,840 cases were reported in Hubei on Thursday after healthcare workers started using CT scans to diagnose the disease. CT scanning allows for quicker diagnosis as compared to the previously used RNA testing which took days to process. The hope is that faster discovery of the disease can lead to quicker treatment which will ultimately reduce the death rate.
Asian markets sensed the gloomy outlook, with benchmarks trading broadly lower despite record closes on Wall Street on Wednesday. Chinese stocks snapped a 7-day rally on news of the rising death toll and increasing number of sick people, with the Shanghai Composite down 0.43 percent and the Shenzhen Composite down 0.25 percent in the mid-afternoon. Hong Kong’s Hang Seng Index eased 0.29 percent, while Japan’s Nikkei 225 dropped 0.14 percent.