Continuing fears over the coronavirus could further underpin gold and push jewellery prices higher, analysts have said.

The precious metal climbed to its highest level in more than two weeks on Monday, before inching slightly downwards the next day. The respiratory illness outbreak in the Chinese city of Wuhan has rattled the financial markets and driven investors to safe-haven assets.

In the UAE, the price of 24-karat (24K) gold was selling at 191.25 UAE dirhams ($52.07) per gram as of 4 pm on Tuesday, up nearly 22 percent compared to 157 dirhams in January 2019.

"There is a significant rise in gold prices this week. The heightened fear and insecurity around the spread of coronavirus turning into a global outbreak have affected gold prices," Karim Merchant, managing director and CEO of Pure Gold Jewellers, told Zawya.

Merchant said the value of the precious metal tends to increase during turbulent times when investors would normally dump riskier assets in favour of safe havens. "In times of uncertainty and crisis, the price of gold goes up, as it is considered a safe haven," he said.

Merchant's views are echoed by analysts surveyed by Kitco. The survey found that the majority of professionals in Wall Street (59 percent) and those in Main Street (67 percent), expect gold prices to increase this week.

Video: Coronavirus fears push UAE gold prices higher

According to Ole Hansen, head of commodity strategy at Saxo Bank, the outbreak of the coronavirus has added another layer of uncertainty to what has already been a volatile month.

While gold has settled into a range around last year's high at $1,555 an ounce, other commodities, such as copper and crude oil, both exposed to Chinese demand, have tumbled, Hansen said.

"So far, the [commodities] sector has already experienced three major price moving events/developments. Middle East tensions were followed by optimism, then skepticism towards the actual impact of the US-China trade deal. Finally, this past week, the market has been dealing with the prospect of another China-born virus raising concerns about its impact on the global economy," Hansen said in his latest analysis.

(Writing by Cleofe Maceda; editing by Anoop Menon)

cleofe.maceda@refinitiv.com

© ZAWYA 2020