· Gold erased early gains to fall more than 1% on Wednesday as mounting fears over the economic hit from the coronavirus overshadowed additional stimulus measures by the United States and prompted investors to sell precious metals to hoard cash.
Spot gold fell 1.1% to $1,511.72 per ounce by 0701 GMT. U.S. gold futures were down 0.9% to $1,512.10 an ounce.
· "The fact that equity markets are still falling is signaling deteriorating global sentiment, which means more investors are going for cash," said Michael McCarthy, chief strategist at CMC Markets.
"Globally, we are lengthening our expectations of how long the economic interruptions from the virus will last and that's another reason driving people to cash."
· U.S. stock futures and several Asian shares fell in choppy trade as worries about the virus eclipsed hopes broad policy support would combat the economic fallout of the outbreak.
· The U.S. dollar eased, but hovered near a four-week high scaled on Tuesday against key rivals, making gold costlier for investors holding other currencies.
· The U.S. Federal Reserve said on Tuesday it would reinstate a funding facility used during the 2008 financial crisis to get credit directly to businesses and households as fears over a liquidity crunch due to the virus have grown in recent days.
Meanwhile, the Trump administration pursued a $1 trillion stimulus package that could deliver $1,000 checks to Americans within two weeks to cushion the economy.
· The U.S. measure helped gold prices rise 1% in early Asian trade before the metal changed its course.
· "That had boosted sentiment a little and we saw the unwinding of some of that behaviour, which is 'sell gold among everything else to find cash,'" IG Markets analyst Kyle Rodda said.
· Among countries and central banks providing stimulus to their virus-hit economies, Britain launched a new lending scheme to provide short-term bridging finance for large businesses hurt by the epidemic, which will be run and funded by the Bank of England.
· Underscoring the economic strain from the virus, a survey showed that the mood among German investors slumped in March to levels last seen at the beginning of the world financial crisis in 2008 due to alarm at the impact on Europe's largest economy.
· Among other precious metals, palladium fell 0.7% to $1,631.42 per ounce, while platinum eased 0.1% to $660.75. Silver was 1.2% lower at $12.44.
· Gold prices rose on Wednesday as the US Federal Reserve's measures to boost liquidity in the market eased some concerns over disruptions to the global economy and a potential cash crunch due to the coronavirus outbreak.
The Fed said on Tuesday it would reinstate a funding facility used during the 2008 financial crisis to get credit directly to businesses and households as fears over a liquidity crunch due to the virus have grown in recent days.
The Fed's measures supported the benchmark US 10-year Treasury yield, which is holding close to a two-week high scaled on Tuesday.
The Trump administration pursued a $1 trillion stimulus package that could deliver $1,000 checks to Americans within two weeks to buttress an economy hit by the virus.
Britain launched a new lending scheme to provide short-term bridging finance for large businesses hurt by the spread of coronavirus, which will be run and funded by the Bank of England.
Japanese Prime Minister will form a panel of key economic ministers and Bank of Japan Governor to discuss measures to prop up an economy hit by the fallout from the epidemic, a government official with direct knowledge of the matter said.
In China the sharp drop in new virus infected cases has encouraged consumers to venture back into malls and restaurants - for the most part quite gingerly but occasionally in throngs.
Reference: Reuters, Economic Times
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