Gold volatile as expected US stimulus stirs stocks
· Gold prices were volatile on Wednesday as markets responded to a $2 trillion U.S. government stimulus package to soften the economic damage of the coronavirus outbreak.
· Spot gold, which rose as much as 5% on Tuesday was up 0.1% to $1,611.73 per ounce. It had earlier fallen 1% after notching up a gain of 1%. U.S. gold futures fell 1.6% to $1,633.40, while world stocks rebounded on expectations of a $2 trillion U.S. fiscal stimulus package being approved.
· “The big downside risk (in gold) remains the potential for those sharp sell-offs in equity markets to be repeated, especially following yesterday’s huge rally,” OANDA analyst Craig Erlam said in a note.
· Senate majority leader Mitch McConnell said the U.S. package had been agreed upon and would be put to a vote on Wednesday.
· “We still see a favorable backdrop for gold as the economic fallout from the corona crisis should strengthen safe-haven demand,” Julius Baer analyst Carsten Menke said.
· Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 1.3% on Tuesday.
· Benchmark spot gold prices traded below U.S. gold futures in a sign that the market is worried that air travel restrictions and refinery closures will hamper shipments of bullion to the United States to meet contractual requirements.
· Among other metals, palladium rose 3.9% to $2,007.33 per ounce, while platinum gained 0.5% to $711.83. Both climbed more than 10% in the previous session after a lockdown in major producer South Africa.
· Silver fell 0.4% to $14.22 per ounce.
Reference: CNBC
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