Gold rebounded from a 3-week low on Wednesday, retracing a big chunk of yesterday's sharp losses. The yellow metal seemed to get a boost from steady Fed policy, even though it was widely expected.
The U.S. central bank held the Fed funds rate steady in the 1.50% to 1.75% range. They reiterated that the Fed would "continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures."
While there was no specific mention of the coronavirus in the policy statement, Fed Chairman Powell acknowledged during the press conference that "there is likely to be some disruption to activity in China and possible globally."
Uncertainty surrounding the Wuhan coronavirus remains elevated and hence continues to impact the market. As of Jan 29, 2020 2:30 pm EST, there are 6,165 confirmed cases of the virus. Of those, 95 are outside of the PRC. The number of deaths stands at 133.
Global growth worries continue to provide some safe-haven related support to gold. The yellow metal traded below the 9-day SMA intraday, but the 20-day was left protected. The strong close offers some encouragement to the bulls.
Silver slipped to a new 5-week low in overseas trading but then was able to reclaim both the 50- and 100-day SMAs on the close. That by no means takes the pressure off of silver, which has been trading more like an industrial metal this week.
Strength in the gold/silver ratio reflects the comparative weakness in the silver market. The ratio surged to a more than 6-month high above 90 this week. Most of those gains came on Tuesday, but the ratio remained well bid on Wednesday.
Palladium rebounded modestly, but remain confined to yesterday's range. Nornickel, the world's largest palladium miner, recognizes that much of the recent record gains have been driven by speculation.
In an effort to ease some of that upside pressure, Nornickel indicated that they would generate more bars at the expense of the Pd powder used by industry. I'm not sure how much impact this will have in reality. They're basically robbing Peter to pay Paul in a market that already has a fundamental supply deficit.
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