Spot gold traded at $1, 615.50 an ounce in Asian trading on Tuesday. During the day, gold prices suddenly accelerated to a low of $1610.40 / oz, down more than $15 from the day’s high, and continue to maintain a downward trend.
Gold short – term down just adjust multiple factors to support super anti-fall!
Although the last session of gold slightly closed down, but overall, gold still showed some resistance. Fears of an outbreak intensified as the us extended restrictions, prompting a flight to safety.
Ground may bank basic metals and precious metals derivatives trading at the Tai Wong, said gold is finally starting to take off recently become risk assets coat, again become more like a safe-haven asset, especially in the United States will maintain social distance measures under the condition of extended to April 30, firmly hold 1600/10 dollars/ounce of solid technical support, it also bring help to gold.
At the same time, lower interest rates and looser economic policy tend to be good for gold, as they reduce the opportunity cost of holding non-yielding assets.
The covid-19 outbreak has paralyzed economies around the world, and international monetary fund managing director gloria georgieva warned on Friday that the outbreak has pushed the global economy into recession and that countries must respond with “massive” spending to avoid a series of bankruptcies and debt defaults in emerging markets.
In addition, the dollar index, which measures the greenback against a basket of currencies, rose, making gold more expensive for investors holding other currencies.
Strategists at TDS said the consolidation of inflation expectations following a series of interventions by governments and central Banks had made a recovery in gold prices possible. The next stage is for gold to do well. The fed’s purchase of more than $1,000bn of treasuries by the end of the week will make gold one of the most obvious trades to come, real interest rates should eventually return to a downward trajectory and central Banks may be willing to let inflation pick up, helping to underpin gold’s multi-year rally.
Russia’s central bank announced on Monday that it would stop buying gold from April 1, without explaining why. At about 20 percent of Russia’s international reserves, gold is not only historically high, but also higher than other central Banks. Analyst genet said Russia may not need more gold reserves.
Dmitry Dolgin, chief economist at ING bank in Russia, said: “the central bank is now sending a signal to gold sellers to shift their supply externally. Global demand seems to be high.”
Suki Cooper, precious metals analyst at standard chartered, said the recent stabilization of equity markets was good news for gold. The next upward move in gold prices is likely to be driven by retail physical demand, and there are signs that this trend is already under way.
But the bank maintained its bullish outlook for gold, predicting that the metal would average $1,725 an ounce in the second quarter despite some profit-taking.
, on the other hand, with central Banks and the government’s efforts to curb the influence of the outbreak, added the reason of holding gold, hedge funds at the fastest speed out of the bearish bets on gold, fund managers cut their last week to the positions of gold of 78%, its biggest drop in more than 10 years of government records.
Analysts at commerzbank said it was clear gold would benefit from an unprecedented money printing spree. The fiscal stimulus came as central Banks began pumping more money into the financial system to ease the economic impact of the outbreak, with the fed’s balance sheet even topping $5tn.
The pandemic forced the closure of gold refineries in Switzerland and the grounding of flights in Hong Kong and Singapore, making it harder to move gold from London to New York. This caused a short squeeze, pushing the premium between contracts and spot gold prices to its highest level in 40 years in April.
Analysts also note that gold prices have fallen sharply in recent weeks as investors seek liquidity to offset losses on other investments in their portfolios. But in addition to the recent volatility in gold prices, central bank decisions in response to a coronavirus pandemic could have long-term implications for the global economy. As a result, these effects will continue to support investment demand for gold for the foreseeable future.
Gold may still be supported by strong demand
According to the latest statistics, the total number of confirmed covid-19 cases worldwide has exceeded 780,000, and the total number of deaths has exceeded 37,000. The total number of confirmed COVID 19 cases in the United States exceeded 160,000, still the most in the world. In addition, more than 100,000 COVID – 19 cases have been confirmed in Italy.
As of 6:30 on March 31, Beijing time, the global total of covid-19 confirmed more than 780,000 cases, reaching 781,485, and the total number of deaths reached 37,578. According to the world health organization, 203 countries and regions have reported COVID 19 cases.
According to the global covid-19 epidemic real-time statistical system released by Johns Hopkins university in the United States, as of 6 am on March 31, Beijing time, a total of 161,367 confirmed cases of covid-19 were reported in the United States, including 2,956 deaths and 5,595 cured cases.
Italy is currently the world’s deadliest country with 11,591 deaths and more than 100,000 confirmed cases. Another 8,358 health workers in Italy were infected with covid-19, according to sky Italia, citing data released by the national institute of advanced health research Wednesday.
So far, the Italian COVID – 19 accumulative total of 101739 cases of the patients, Spain has confirmed 87956 cases, Germany has confirmed 66885 cases, confirmed 44550 cases of France, and Iran has confirmed 41495 cases, the diagnosis of 22141 cases, Switzerland has confirmed 15922 cases, Belgium has confirmed 11899 cases, the Netherlands confirmed 11750 cases, Turkey has confirmed 10827 cases, South Korea confirmed 9661 cases.
The world health organization said there were some signs of a stabilization of the outbreak in Europe’s worst affected country, Italy, as the number of new cases in the region recorded its lowest in nearly two weeks.
‘it is our fervent hope that the outbreaks in Italy and Spain are nearing their peak and that the blockades imposed in Europe a few weeks ago are beginning to pay off,’ Mike Ryan, who’s head of public health emergencies, said on Monday.
If the global outbreak continues to become more difficult to contain, then risk aversion will cool and central Banks will ease further, which will provide solid safe-haven demand for gold.
Golden aftermarket outlook
“The market volatility caused by a novel coronavirus is back,” said Peter Fertig, a commodities quantitative research analyst. Gold benefited from safe-haven buying after European stocks fell. In the short term, gold should be supported by safe-haven buying, but if equity markets fall further, selling to meet margin calls could resume.”
“The massive amount of liquidity the fed will inject into the market won’t move gold higher, but that could change soon,” ActivTrades chief economist Carlo Alberto De Casa said in a note.
Todd Horwitz, the chief market strategist at BubbaTrading.com, wrote that since the rally last Monday and Tuesday, metal prices have either fluctuated in a consolidation or fallen back, suggesting that the situation is unclear and that the road ahead may be bumpy. The gold, silver, and platinum markets are set for another big move; The real question is which way to go. With the June contract hovering between $640 and $1,680, gold looks set to move higher. Based on the range, a big move is in the pipeline. We are long and will remain so until the situation changes, although the next step is more of a coin flip.
Credit Suisse expects the novel coronavirus crisis to eventually push gold to a record above $1,921 an ounce. Gold initially suffered a sharp sell-off during the 2008 financial crisis, but the precious metal eventually rallied after the fed’s intervention, starting a historic bull market.
“It is important to note that real yields have stopped rising and we continue to believe that similar dynamics will continue,” said Credit Suisse. In 2009, after an initial sharp correction in 2008, gold finally reached a new all-time high.”