Gold rises as investors search for safety
Spot gold lifts on Friday but bullion still on track for second weekly decline
Bengaluru — Gold prices rose 1% on Friday as safe-haven buying offset a rush for cash amid fears over the economic hit from the coronavirus, but bullion was headed for a second weekly drop as investors sold the metal to meet margin calls in other assets.
Spot gold rose 0.8% to $1,481.30/oz by 3.28am GMT after a 1% fall in the previous session and was en route to post a near 3% decline for the week. US gold futures climbed 0.5% to $1,486.50/oz.
“Gold continues to maintain its safe-haven properties, and has been performing better than other commodities,” said John Sharma, an economist with National Australia Bank. “However, with deep fears of an impending coronavirus-induced recession, investors are flocking to cash, treasuries and the dollar, and shedding some gold holdings to cover margin calls.”
Asian shares sought a reprieve after gains on Wall Street, while the dollar was set for its biggest weekly rise since the 2008 crisis as the epidemic drove a dash for cash. The US Federal Reserve opened the taps for central banks in nine new countries to access dollars in hopes of preventing the outbreak from causing a global economic rout.
Several countries rolled out measures to stem the economic damage, with the US Senate unveiling a $1-trillion economic stimulus plan, while the Bank of England promised £200bn of bond purchases and cut its key interest rate to 0.1%. While gold has been reacting to moves in financial markets and at times found support from stimulus measures, “it’s a bumpy ride as liquidity and participation continue to fall by the wayside,” said Stephen Innes, chief market strategist at AxiCorp, in a note. “I’m not so sure this is so much a function of the market, or due to the fact that many gold traders are working at home.”
The global economy is already in a recession as the hit to economic activity has become more widespread, a Reuters poll showed. The number of Americans filing for unemployment benefits surged by the most since 2012 last week.
Palladium rose 0.5% to $1,660.30/oz. Platinum jumped 3.1% to $604.66/oz but was set to post its biggest ever weekly fall. Silver gained 2.6% to $12.42/oz, but was on track to post its second steepest weekly decline of about 15% since September 2011.
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