Gold prices rose sharply on Monday amid expectations global central banks will cut interest rates to support the global economy, which is staring at an imminent slowdown due to the coronavirus outbreak.
The safe-haven yellow metal's values plummeted last week as investors liquidated positions to meet margin calls in other assets such as equities.
The U.S. Federal Reserve Chair Jerome Powell said last week that the bank will act as appropriate to boost growth. Goldman Sachs economists said on Sunday that the Fed is likely to join other global central banks in cutting interest rates aggressively in response to the coronavirus scare, Goldman Sachs economists said Sunday.
The Bank of Japan signaled today that it will make every effort to ensure stability in financial markets roiled by the coronavirus outbreak.
The Bank of England said it would take all necessary steps to maintain market stability.
The dollar index declined to 97.18 around noon, and later recovered to 97.36, still trailing its previous close by about 0.8%.
Gold futures for April ended up $28.10, or about 1.8%, at $1,594.80 an ounce.
On Friday, gold futures for April ended down $75.80, or 4.6%, at $1,566.70 an ounce.
Silver futures for May ended up $0.282 at $16.739 an ounce, while Copper futures for settled at $2.5950 per pound, gaining $0.0550 for the session.
A report released by the Institute for Supply Management on Monday showed U.S. manufacturing activity saw a slight expansion in the month of February.
The ISM said its purchasing managers index edged down to 50.1 in February from 50.9 in January, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to dip to 50.5.
Construction spending in the U.S. jumped by 1.8% to an annual rate of $1.369 trillion in January after inching up by 0.2% to a revised rate of $1.346 trillion in December. Economists had expected construction spending to climb by 0.7% compared to the 0.2% dip originally reported for the previous month.
The Organisation for Economic Co-operation and Development (OECD) downgraded its global growth outlook on Monday, saying the impact of the Covid-19 outbreak on economic prospects is set to be severe.
The Paris-based think tank lowered the global growth projection for this year by 0.5%, while prospects for China was revised down markedly, with growth seen slipping below 5% this year.
In the Interim Economic Assessment, the OECD said global GDP growth is projected to drop to 2.4% in 2020 from an already weak 2.9% in 2019. The forecast for 2021 was trimmed to 3.3% from 3.6%.
The OECD urged governments to act swiftly and forcefully to overcome the coronavirus and its economic impact. If downside risks materialise, and growth appears set to be much weaker for an extended period, then co-ordinated multilateral actions should be taken, the agency added.