Gold rises on safe-haven appeal but set for weekly drop
· Gold prices rose on Friday as safe-haven buying offset a rush for cash amid fears over the economic hit from the coronavirus, but bullion was headed for a second weekly drop as investors sold the metal to meet margin calls in other assets.
· Spot gold gained 0.84% to $1,482.57 per ounce after a 1% fall in the previous session and was en route to post a near 3% decline for the week. U.S. gold futures climbed 0.34% to $1,484.70.
· “It’s definitely risk hedge buying. If only for a day ... what can you buy to hedge weekend risk? You can be in cash or precious metals, that’s about it,” said Jeffrey Halley, a senior market analyst at OANDA.
· Asian shares sought a reprieve following gains on Wall Street, while the dollar crossed a three-year high as the epidemic drove a dash for cash.
· The U.S. Federal Reserve opened the taps for central banks in nine new countries to access dollars in hopes of preventing the outbreak from causing a global economic rout.
· Several countries rolled out measures to stem the economic damage, with the U.S. Senate unveiling a $1 trillion economic stimulus plan, while the Bank of England promised 200 billion pounds of bond purchases and cut its key interest rate to 0.1%.
· While gold has been reacting to moves in financial markets and at times found support from stimulus measures, “it’s a bumpy ride as liquidity and participation continue to fall by the wayside,” said Stephen Innes, chief market strategist at AxiCorp, in a note.
· “I’m not so sure this is so much a function of the market, or due to the fact that many gold traders are working at home.”
· The global economy is already in a recession as the hit to economic activity has become more widespread, a Reuters poll showed.
· The number of Americans filing for unemployment benefits surged by the most since 2012 last week.
· Among other precious metals, palladium rose 0.5% to $1,660.82 per ounce. Platinum jumped 4.6% to $613.54 but was set to post its biggest ever weekly fall.
· Platinum and palladium will remain turbulent in coming months after huge losses sparked by the spread of the coronavirus, before starting a tentative recovery with support from palladium’s supply gap and platinum’s correlation with gold, analysts said.
· Silver gained 3.5% to $12.54, but was on track to post its second steepest weekly decline of about 15% since September 2011.
Reference: Reuters
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