Gold jumps 1% as oil price slump drags down share markets
· Gold climbed as much as 1% on Monday after earlier hitting a more-than one-week low, with the collapse of U.S. crude oil prices to a record low hitting risk assets and driving investors to the safety of bullion.
· Spot gold gained 0.5% to $1,692.26 per ounce at 2:10 p.m. EDT (1610 GMT), after earlier hitting the lowest level since April 9, at $1,670.55. U.S. gold futures settled up 0.7%, at 1,711.20.
· “Gold is rising on bets that the unprecedented global monetary stimulus (measures) will only rise and after the historic turmoil in the oil industry reminded everyone that we are far away from seeing a return of normal global economic activity,” said Edward Moya, a senior market analyst at broker OANDA.
“It is hard to imagine that risky assets will continue to shine this week and that should provide strong underlying support for gold. ... If gold continues to hold the $1,700 level by the end of trade today, the eventual test of $1,800 could happen this week,” Moya said.
· Global equity markets took a hit from plunging U.S. crude oil prices, which have slumped more than 100% to turn negative for the first time ever.
· Oil has been pressured for weeks, with the coronavirus outbreak hammering demand. Even though Saudi Arabia and its allies agreed, more than a week ago, to cut supply by 9.7 million barrels per day, that will not quickly reduce the global glut.
· The markets are much less confident about Europe and the United States getting back to business ahead of the summer, a Deutsche Bank investor survey showed on Monday, even as some countries begin gradually reopening their economies.
· “There will be a positive view of the economy going forward as things open up and given all the massive amounts of monetary and fiscal stimulus, the market will turn to gold as a protector against inflation,” said Bart Melek, head of commodity strategies at TD Securities.
· However, a Reuters poll on Monday showed gold prices are likely to consolidate below recent highs during 2020 and 2021 on dollar strength and weak retail consumption.
· Analysts and traders in a Reuters poll forecast palladium will remain undersupplied even as the coronavirus outbreak hammers automakers, reducing demand.
· Palladium rose 0.1% to $2,158.34 per ounce, platinum dipped 0.2% to $773.88, while silver was up 1% at$15.28 per ounce.
Reference: Reuters
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