Gold dips to 1-week low on profit-taking, economies opening
· Gold fell to a one-week low on Tuesday as investors took profits, with bullion further weighed down by upbeat plans in some countries to loosen restrictions put in place due to the coronavirus.
· Spot gold fell 0.7% to $1,702.40 per ounce, after falling as much as 1.4% earlier in the session. U.S. gold futures settled down 0.1% at $1,722.20.
· “It’s been a bit of thrust-and-parry between $1,700-$1,730; buyers below but sellers above,” said Tai Wong, head of base and precious metals derivatives trading at BMO. “I think there is profit-taking from investors though as producers don’t have enough to sell to really stanch a rally, especially with mine shutdowns and other supply bottlenecks.”
· Data earlier in the day showed U.S. consumer confidence tumbled to near a six-year low in April and the pandemic was severely limiting the flow of goods between countries, with exports from the United States collapsing and imports from other nations continuing to decline.
· Stock markets across the globe managed to rise on Tuesday, but conflicting measures and warnings on the coronavirus pandemic cast an uneasy tone. From Italy to New Zealand, governments announced the easing of restrictions. More parts of the United States looked set to restart business, though Britain said it is too dangerous to relax a stringent lockdown for fear of a second outbreak.
· Lockdowns in many countries, to curtail the spread of COVID-19, have hammered the economy as businesses came to halt, leaving many unemployed.
· “Any dips in gold should be bought up pretty quickly ... Countries are bailing out entire industries. Interest rates are at near nothing. That’s not going away anytime soon,” said Bob Haberkorn, senior market strategist at RJO Futures.
“With that being said the new normal for gold should be $1,700 if not higher.”
· Central banks around the world have rolled out stimulus measures to combat financial impact from the virus, which has infected about 3.03 million people globally and killed 210,263.
· Safe-haven gold tends to benefit from widespread stimulus measures from central banks and governments because it is widely viewed as a hedge against inflation and currency debasement.
· Investors will now look for any forward guidance from the U.S. Federal Reserve, which is expected to issue a policy statement on Wednesday. The European Central Bank meets on Thursday.
· Elsewhere, palladium fell 0.8% to $1,909.35 per ounce and platinum gained 1.1% to $766.33. Silver dropped 1.4% to $15.05.
Reference: CNBC
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