Gold slides further as global stimulus hopes buoy equity markets
· Gold slid over 1.5% on Tuesday, backing off the $1,700 ceiling hit in the previous session, as expectations of global policy measures to alleviate the economic impact from the coronavirus eased some investors’ concerns and lifted share markets.
· Spot gold lost 1.6% to $1,653.33 an ounce by 2:37 p.m. EDT (1837 GMT). U.S. gold futures settled down 0.9% at $1,660.30.
· “With the volatility that we had in the U.S. equity markets in the past few days, we are seeing some people lightening up on gold a little bit,” said Michael Matousek, head trader at U.S. Global Investors.
“When you are trying to keep a proper allocation across your investments, you need to sell a little bit of gold and buy a little bit of S&P and that’s what you’re seeing right now. People are rebalancing portfolios.”
· Bullion rose as much as 1.7% on Monday to its highest since December 2012 at $1,702.56 after a rout in global equity markets and crashing crude oil prices.
· Oil and global equity markets recovered on Tuesday as signs of coordinated policy easing to avert a global recession soothed traders.
· U.S. President Donald Trump vowed to take “major” steps to bolster the economy, and Japan unveiled a second package of measures worth about $4 billion to cope with fallout from the virus outbreak.
· The U.S. central bank, having delivered an emergency rate cut last week, is expected to cut rates again at its next meeting on March 18.
· The European Central Bank is under pressure to help bolster economic growth. It meets on Thursday.
· U.S. Treasury yields rose from all-time lows, and the dollar also rebounded after major losses, further pressuring gold prices.
· “It could be that Tuesday’s rebounds in the equities markets could be the so-called ‘dead-cat bounce’ that occurs after major market sell-offs, only to see prices continue to trend down,” Kitco Metals senior analyst Jim Wyckoff said in a note.
“The general public’s fear of Covid-19 appears to be continuing to grow.”
· The specter of the coronavirus remained in the background with over 114,300 people infected globally.
· Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose to 30.99 million ounces, its highest since October 2016.
· In other precious metals, palladium fell 3% to $2,414.82 an ounce, silver declined 0.3% to $16.92 and platinum rose 0.8% to $869.34.
Reference: Reuters
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