Gold falls as investors cash in on profits
Gold fell on Monday as investors booked profits after prices hit a one-month high last week, while worries over a coronavirus-driven steeper global economic downturn and the US Federal Reserve’s stimulus measures limited bullion’s losses.
Spot gold slipped 0.4% to $1,682.65/oz by 05.22am GMT, having risen to its highest since March 9 on Friday. US gold futures fell 1.1% to $1,732.90.
“We’re seeing a little bit of reversal of Friday night’s move, which was driven by the Fed’s latest policy action. A little bit of profit-taking is kicking in,” IG Markets analyst Kyle Rodda said, adding that gold faced a stiff technical resistance around the $1,690 level. But broadly speaking, gold is remaining very well supported.”
In a bid to keep the economy afloat amid the outbreak, which had forced 16.8-million Americans to file for unemployment benefits since the week ended March 21, the Fed on Thursday announced a broad, $2.3 trillion stimulus package.
“The Fed stimulus is a magnet for gold. Not only does it improve the opportunity cost for holding gold but at some stage it will eventually water down the dollar,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
European Union finance ministers also agreed on half-a-trillion euros worth of economic support but left open the question of how to finance recovery in the bloc headed for a steep recession.
Commodity currencies slipped against safe-haven units such as the dollar and yen as a record output cut agreed by major oil producing nations failed to offset broader concerns about global demand for resources, while world shares fell as investors braced for more economic damages from the coronavirus pandemic.
Meanwhile, major physical bullion hubs saw activity dwindle last week due to coronavirus-led restrictions, with strained supply chains cut off from soaring safe-haven demand in some regions.
Reflecting appetite for bullion, holdings in SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, rose 0.6% to 994.19 tonnes on Thursday. Palladium rose 3.4% to $2,245.48/oz, while platinum slipped 0.9% to $741.60 and silver fell 0.5% to $15.24.
Would you like to comment on this article or view other readers' comments? Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.