BBC.- The price of gold has surged to its highest level in seven years as worries about the coronavirus led investors to seek a safe place for their money. Gold prices climbed more than 2% on Monday to levels not seen since February 2013.
The price for immediate delivery went as high as $1,678.58 an ounce before falling back slightly.
Meanwhile, stock markets in Europe opened lower, with London’s FTSE 100 down more than 3% in early trading.
Milan’s main index was worst hit, falling more than 4%. Italy has seen Europe’s worst outbreak of the coronavirus and the government has announced a series of drastic measures, with a lockdown in place in several small towns.
Frankfurt’s Dax index and the Paris Cac-40 both fell more than 3%.
Airlines and travel firms were particularly hard hit, although the sandstorms in the Canary Islands also weighed on their share prices.
In the UK, the three biggest fallers on the FTSE 100 were EasyJet, Tui and British Airways owner IAG, down 12%, 9% and 7% respectively.
“There has been so much complacency in recent weeks from investors, despite clear signs that China’s economy is facing a large hit and that supply chains around the world were being disrupted,” said Russ Mould, investment director at AJ Bell.
“Markets initially wobbled in January, but had quickly bounced back, implying that investors didn’t see the coronavirus as a serious threat to corporate earnings. They may now be reappraising the situation.”
The market moves come as companies continue to warn about the effect of the coronavirus on their supply chains and overall financial health.
Associated British Foods, which owns clothing retailer Primark, warned on Monday that there could be shortages of some lines if delays in factory production in China were prolonged because of virus-related shutdowns.
In China itself, officials have said most small businesses have yet to reopen after the authorities extended the Lunar New Year holiday in an effort to contain the spread of the virus.
Only about three out of 10 small and medium-sized enterprises (SMEs) were back to work, while transport problems were preventing workers from travelling and disrupting shipments of raw materials, said industry ministry spokesman Tian Yulong.
SMEs make up about 60% of the Chinese economy.
Analysts said the gold price could breach the $1,700 barrier soon.
“Gold has finally established some serious momentum,” said Jeffrey Halley, senior market analyst at online trading platform Oanda.
At the same time, oil prices fell more than 3% on Monday, as investors worried about a fall in demand following the temporary factory closures due to the virus.
The price of Brent crude dropped by nearly $2 to $56.57 a barrel.
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