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Gold Stuck in Narrow Range as Virus Fears Battle Solid Data

By Geoffrey Smith

Investing.com -- Gold prices drifted sideways again in extremely narrow ranges on Wednesday as another burst of generally upbeat economic data depressed demand for haven assets, while lingering concern about the spread of the coronavirus and fresh trade disputes restricted selling.

By 11:40 AM ET (1640 GMT), gold futures for delivery on the Comex exchange were at $1556.25 a troy ounce, down only 0.1% on the day having traded in a range of only $8 all day.

Spot gold was likewise flat at $1,556.35 an ounce.

Earlier, a splurge in U.K. government spending and an upbeat report from the CBI business association on the outlook for manufacturing had put another hole in the argument for lower Bank of England interest rates. Together with the five-year high in Germany’s ZEW economic sentiment index, the indicators will sharpen interest in the widely-followed purchasing managers indices from IHS Markit, preliminary estimates for which are due on Friday.

Likewise, fresh data suggested the U.S. housing market is still in strong shape, as existing home sales hit their highest level in 20 months in December.

However, those betting on further monetary easing across the world could take solace from a dovish-sounding statement from the Bank of Canada, which said that spare capacity in the economy had increased since October and noted that the “Governing Council will be watching closely to see if the recent slowdown in growth is more persistent than forecast.”

Expectations of a rate cut in the U.K. next week are also still alive, with Barclays (LON:BARC) analysts changing their call for next week’s meeting to a 25-basis-point easing after a string of dovish comments from members of the Monetary Policy Committee.

Elsewhere in the metals complex, silver futures rose 0.1% to $17.82 an ounce, while platinum recovered some momentum, rising 1.4% to $1.021.25. Palladium continued to spike higher, hitting a new all-time high of $2,337.50 an ounce before retracing to $2,325.30, up 4.2% on the day.

Copper futures struggled again, losing 0.9% to $2.77 a pound.

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