Spot gold traded at $1, 635.00 an ounce in Asian trading on Thursday. Gold fluctuated wildly during the day, recovering sharply to break through the 1650 mark earlier before retreating sharply from that point, falling nearly $20 from the day’s high to as low as $1630.65 an ounce. It is currently trading at $1637.90 an ounce.
COMEX April gold futures, meanwhile, closed down $18.00, or 1.1 percent, at $1,642.30 an ounce
Gold retreated in the previous session as traders sold the precious metal as the spread of the disease around the world led to margin calls in battered equity markets.
At the same time, market analysts pointed out that in order to save the risk of stock market burst, in addition to the personal cash supplement collateral, investors may withdraw funds from the gold market, and into the stock market supplement collateral, which directly led to the gold market fell.
The dow jones industrial average fell 1464.94 points, or 5.9%, to 23,553.22, falling into a technical bear market, as concerns about President Donald trump’s stimulus plan to ease the economic impact of the outbreak sent stocks into another wild sell-off. Toronto and Brazil’s benchmark stock index triggered a circuit breaker for the second time this week.
Td securities commodity strategist Ryan McKay said gold prices are basically range-bound, the outbreak fears hanging over stocks continue to provide support, and central Banks around the world are providing stimulus.
The 10-year Treasury yield resumed its downward trend on Wednesday, continuing its slide toward record lows hit on Monday, further supporting gold. The federal reserve cut interest rates in an emergency move last week and is expected to cut further at its meeting later this month. Gold prices tend to rise in anticipation of lower interest rates as low rates reduce the opportunity cost of holding non-yielding gold.
The European central bank is also expected to announce fresh stimulus measures on Thursday, with the bank of England cutting interest rates by half a percentage point to 0.25 percent without warning on Wednesday in a bid to shore up the UK economy against the impact of the outbreak.
In an address to the nation, US President Donald trump said he would suspend all travel from Europe to the us for the next 30 days. It’s the most extensive measure the us government has taken to contain a new outbreak of pneumonia.
Who declares new coronavirus outbreak a ‘global pandemic’ the dow Jones industrial average plunged into a bear and NASDAQ futures triggered a circuit breaker
The world health organization (WHO) on Wednesday declared the new coronavirus a global pandemic. The new coronavirus, unknown to the world health organization just three months ago, has spread rapidly to Asia, Europe, the Middle East and parts of the United States, where it has infected more than 121,000 people worldwide.
The director-general of the world health organization (who), mathieu tandesay, said the new crown pneumonia outbreak had acquired pandemic characteristics. “We can’t say loudly enough or explicitly enough that all countries can change the pandemic,” says tandeser.
Who officials have been reluctant to classify the virus as a global pandemic, generally defined as a disease that spreads widely around the world.
Global health experts say declaring a pandemic would have significant political and economic implications. It could further destabilize already fragile world markets, leading to tighter restrictions on travel and trade.
According to the who’s daily outbreak report, the number of confirmed pneumonia cases worldwide increased by 4627 to 118326 from the previous day. The number of deaths increased by 280 from the previous day to 4,292. The number of newly diagnosed pneumonia cases outside China increased by 4596 to 37,371 from the previous day. The number of deaths increased by 258 from the previous day to 1,130.
Lawrence Gostin, professor, and director of Georgetown university’s o ‘Neill institute for national and global health law said who officials needed to be “clear” that the world was in the midst of a pandemic. ‘it will continue to be a distraction until they announce it,’ he added.
Gostin said it was “clear” that the new coronavirus had become an epidemic and that who was “lagging behind”.
The number of cases and deaths varies from hour to hour, with more than 121,564 people confirmed worldwide and at least 4,373 dead as of Wednesday morning, according to data compiled by Johns Hopkins University.
As of 3 a.m. Edt Tuesday, the virus had spread to at least 109 countries, with 32,778 confirmed cases in those countries, up from four on Jan. 21, according to the latest data confirmed by the world health organization.
Stocks tumbled Wednesday after the world health organization declared the outbreak a global pandemic. The dow fell 1,464.94 points, or 5.9%, to 23,553.22. Thirty stocks ended the day in a bear market, down more than 20% from last month’s record close, ending an expansion that began with the 2008 financial crisis.
The s&p 500 closed down 4.9% at 2,741.38, close to a bear market. The NASDAQ fell 4.7% to 7,952.05, down about 19% from its all-time high. A 20% drop is considered a bear market on Wall Street. However, most investors did not formally acknowledge this until the index closed.
“We can see the panic in the stock market,” said Jerry Braakman, chief investment officer at First American Trust. “The big question for most people is, has the market hit bottom? However, in my view, it still has the potential to go down.”
Futures on three major U.S. stock indexes continued to fall in the Asian session on Thursday amid market fears, with futures falling more than 5 percent to trigger a circuit breaker. Meanwhile, intraday European stock futures also extended losses, with Europe Stoxx 50 index futures down 3.7% and Germany’s DAX index futures down 3.7%.
Golden aftermarket outlook
ABN Amro expects gold to fall, to average $1,500 an ounce in the second quarter. The bank’s economists expect precious metals prices to continue to weaken in the coming months as a result of further interest rate cuts, slower economic growth and a stronger dollar.
Precious metals strategist Georgette Boele noted that “as recent weeks have shown, the risk aversion to gold is far from stable, and being long is still a crowded trade,” and she expects prices to hit $1,550 an ounce by the end of the month, up from an average of $1,500 in the second quarter.
Market analysts said the current gold trading is extremely “crowded”, investors should be wary of gold suddenly plunged to $1,500.
Jeff Wright, vice chairman of GoldMining, said gold consolidation at lows was not a bad thing. “It would be better for the market to see gold in the $1,600 – $1,700 area rather than buying out of fear.”
UBS analyst Joni Teves said the trend in the gold market was clearly to the upside. “Safe-haven demand remains high across the market and the weakness in bond yields is also positive for gold.” For gold prices to fall after the rally, driven by investors selling gold to raise margin, Teves said there was a real case. “But investors will still hold gold to keep their portfolios diversified and will choose to buy on dips when gold prices fall.” In the short term, gold is expected to test the resistance level of the $1,700 / oz mark.
“Gold is not a clear winner because many investors are also looking to scale back and buy equities,” Edward Moya, senior market analyst at Oanda, told MarketWatch. With [us Treasury] yields showing signs of stabilizing, gold is going to struggle somewhat in the short term.”
Analysts at Zaner Metals wrote in a daily note that the stimulus talk “has overnight eased economic concerns that have supported equity markets and depressed gold prices. This also provides support for silver. Silver had been trading in the opposite direction to gold, which sold off after Monday’s big stock market drop.”
Todd Horwitz, the chief market strategist at BubbaTrading.com, wrote that the more things change and the faster the market changes, the more gold, silver and platinum remain the same. The sell-off was an apparent reaction to gold’s record high in trading from Sunday night to Monday morning. Platinum is still slightly lower but has moved from bearish to consolidation, while silver is still looking for new buyers for capital.