Spot gold traded at $1, 487.80 an ounce on Thursday. The previous session saw another volatile pullback in gold prices, which have been under pressure all the way to a low of $1,473.30 an ounce and are now struggling to settle around that low. The dollar index surged to a high of 101.74 and is now well above the 101 level.
Day at present, spot gold short – term down 10 dollars, the day turned down. Spot silver’s intraday gain quickly narrowed to 0.35 percent after earlier rising more than 2 percent to trade at $11.98 an ounce.
Gold prices fell nearly 3 percent in the previous session as investors sold precious metals in search of cash and additional us stimulus measures failed to calm sentiment amid growing fears of an economic downturn triggered by a coronavirus.
COMEX April gold futures, meanwhile, closed down $47.90, or 3.1%, at $1,477.90 an ounce, the lowest close since December 2019.
Gold has lost more than 12 percent, or $200, since soaring above $1,700 last week as investors sold the metal in exchange for cash and margin calls.
Moreover, the CBOE gold ETF volatility index, which tracks ETFs to gauge expected price volatility, has more than doubled in the past six sessions to its highest level since November 2008.
Gold, traditionally known as a “safe haven”, usually does well during market sell-offs, but it was not immune to last week’s sell-off in global equity markets as the coronavirus pandemic spread.
Analysts say global stocks could still fall sharply if market panic deepens, which could put pressure on investors to cash in on margin calls.
Tai Wong, head of the base and precious metals derivatives trading at mandico bank in Hong Kong, said risk aversion continued to weigh on gold, which returned to below $1,500 as s&p futures gave up stimulus-driven gains. Like most markets, the gold market has been severely affected in terms of liquidity and is expected to see continued volatility, driven by market sentiment.
Tai Wong, head of trading at BMO foundation and precious metals derivatives, said: “there continues to be a risk aversion in the market, with gold falling below $1,500 as s&p futures abandon the stimulus-driven rally. Liquidity here, like in most markets, has been severely affected and we expect to see continued volatility and mood-driven volatility.”
“Gold prices will continue to fluctuate in the coming days as investors wait to see if the Trump administration can quickly pass its massive stimulus package,” Edward Moya, senior market analyst at broker OANDA, said in a note. “If we see a repeat of the financial crisis and congress fails to act quickly, the fight for money will continue.”
“Volatility remains the dominant market story, and gold is no exception,” Carlo Alberto De Casa, chief analyst at Activ Trades, said in an email. We are not surprised to see a positive correlation between equities and gold, as many traders use gold as an ATM to meet margin calls on other investment positions each time the market falls sharply.
Us stock market collapse again triggered the history of the fifth “circuit breaker”! Recession fears persist
The previous session saw another major U.S. stock market crash, which triggered the fifth circuit breaker in history and the fourth in 10 days. The dow erased gains since President trump took office.
New York (ap) — stocks tumbled again Wednesday to their lowest levels since the new global financial crisis, as investors worried about the damage a new pandemic would do to the economy. The dow jones industrial average fell 1,338.46 points, or 6.3%, to 19,898.92, closing below 20,000 for the first time since February 2017. At one point, the dow was down more than 2,300 points. The s&p 500 fell 5.2% to 2,398.10, nearly 30% below the record set last month. The NASDAQ composite index fell 4.7% to 6,989.84. Indeed, no market was immune to the sell-off, with crude oil falling by the third-largest amount on record.
Michael McCarthy, the chief strategist at CMC markets, said: “the fact that equity markets are still falling suggests that global sentiment is deteriorating, which means more investors are cashing in. Globally, we are extending expectations of how long the economic disruption caused by the new coronavirus will last, which is another reason for people to cash out.”
Jigar Trivedi, commodities analyst at Anand Rathi Shares and Stock Brokers in Mumbai, India, said: “People are predicting or predicting a recession and there is some pain in the energy and precious metals markets. “The central bank’s interest rate cut, liquidity injection and policy adjustment have not calmed the market. Investors are seeking economic measures to ease the impact of the current outbreak. But the outbreak itself is the root cause.
The U.S. Senate on Wednesday voted 90-8 to expand paid leave and unemployment benefits in response to the coronavirus pandemic.
According to media reports, President Trump signed the second round of the new coronavirus rescue bill, including free virus testing and other measures. US President Donald Trump signed into law a second new coronavirus (nv) relief bill on Thursday, offering a package of economic assistance for the us to deal with the outbreak of nv pneumonia. The programme focuses on measures such as free testing for new coronavirus, support for paid sick leave during outbreaks, expanded unemployment insurance and expanded food subsidies.
According to a Treasury memo obtained by the Washington Post, the Treasury’s new cap pneumonia stimulus plan is aimed at $1 trillion, including $2,000 in checks for Americans. The plan could also include $300 billion to help small businesses avoid mass layoffs.
As for the epidemic situation, the world health organization (who) real-time statistics show that as of 1:00 PM Beijing time, the global total of confirmed cases of new crown pneumonia reached 207860, with 8657 deaths, and 166 countries and regions reporting cases.
According to real-time statistics released by Johns Hopkins University, a total of 7324 new cases of pneumonia and 115 deaths have been confirmed in the us as of 1:00 pm Beijing time on April 19.
Golden aftermarket outlook
Ole Hansen, head of commodities strategy at Saxo Bank, wrote that gold had failed to rebound in the past few weeks because of the continued spread of pneumonia and rising economic uncertainty, reminiscent of the 2008 financial crisis. In the early days of the 2008-09 crisis, deleveraging was needed to liquidate or cover other losses, so all assets were sold. In the weeks leading up to the crisis, gold suffered a 27% sell-off, falling to $725 an ounce, before rising to $1,920. Hansen said the long-term case for holding gold has been strengthened by current developments.
Ole Hansen, the analyst at Saxo Bank, said: “The key for gold at the moment is to hold support at 1,450 and a breach would increase the risk of a fall towards 1,380. With auto sales and consumer confidence taking a beating and the market also facing major demand surprises, whether the liquidation of gold bulls will continue in the short-term outlook is a key factor.”
Todd Horwitz, the chief market strategist at BubbaTrading.com, wrote that gold investors were excited again on Tuesday about the potential for gold to break higher. For now, the long-term trend is back and gold is taking a beating. As we’ve written before, metal prices are falling and this rally was meant to sell.
Bob Haberkorn, the senior market strategist at RJO futures in New York, said the fed’s move to inject more liquidity was helping gold ease from selling pressure in anticipation that it would start to perform as a safe haven as it should.
Michael Matousek, head of trading at US Global Investors in New York, said there were a number of fundamental factors driving gold higher, as well as technical evidence that the metal had sold off too much in the past two sessions and that there was now an opportunity to re-enter the gold market.
Kshitij’s advisory services team says it expects gold to rebound toward $1,600 an ounce in the short term as long as the rally continues above $1,500 an ounce. Daily chart downside may be limited to short-term support of $1,450 / oz; Only when gold falls below $1,450 an ounce does it force us to bet further against gold.