Gold prices fell on Tuesday as investors booked profits from the recent rally and the dollar firmed, although concerns over a new coronavirus kept safe-haven bullion underpinned.
Spot gold fell 0.2% to $1,577.85 per ounce by 0820 GMT, after hitting a near three-week peak on Monday. U.S. gold futures were flat at $1,578.10.
Bullion rose for the past four sessions as the spread of the coronavirus rattled financial markets and prompted authorities to impose travel restrictions and extend the Lunar New Year holidays.
“Gold has been positive for the last few sessions and is witnessing profit booking now,” said Jigar Trivedi, a commodities analyst at Anand Rathi Shares and Stock Brokers in Mumbai adding “uncertainty and global growth concerns due to coronavirus are still there.”
Further weighing on gold, the dollar .DXY hovered close to a near two-month high hit earlier in the session.
“(Gold) could reach $1,600, but would be more around the $1,570-$1,590 levels as we need to get more information, there are a lot of unknown variables around the virus,” said John Sharma, an economist at National Australia Bank (NAB).
Asian shares extended a global selloff on Tuesday as the death toll from the virus reached 106 in China and some health experts questioned whether Beijing can contain the virus which has spread to more than 10 countries, including France and the United States.
Gold is considered a safe investment during times of economic and political uncertainty.
Investors will focus on the U.S. Federal Reserve’s first meeting of the year due later in the day, where it is widely expected to keep interest rates unchanged.
Lower interest rates reduce the opportunity cost of holding non-yielding bullion.