Gold slips away from multiyear high
Bengaluru — Gold edged lower on Thursday, easing off a near eight-year high hit in the last session, as a sell-off in equity markets driven by a surge in coronavirus cases prompted some investors to dump assets.
Spot gold was down 0.1% at $1,760.39/oz as of 3.07am GMT, having soared to its highest level since October 2012 of $1,779.06 on Wednesday. US gold futures fell 0.2% to $1,771.80.
“The behavioural pattern we’ve seen this year is that when stocks and energy fall, there is a rush for cash across all asset classes, including gold,” said Jeffrey Halley, senior market analyst at Oanda. However, he added, “any short-term correction is likely to be a slow grind lower, and not a rush for the exit doors”, as safe-haven buying and low interest rates provide support for bullion.
Indicative of gold’s overall appeal, which has driven a 16% jump in prices in 2020, holdings of the world’s biggest gold-backed exchanged traded fund, the SPDR Gold Trust, hit their highest in over seven years. Asian stock markets fell on surging US coronavirus cases and an IMF downgrade to economic projections, driving inflows into alternate safe haven, the dollar.
Gold has, on occasion, moved in tandem with equity markets in 2020, with steep sell-offs driving a rush for cash and as traders met margin calls. Three US states reported record increases in new cases on Wednesday. There has been a rise in cases elsewhere as well, including Brazil, Latin America and India, which is also the world’s second-biggest bullion consumer.
On the physical side, jewellery consumption is likely to remain modest, “limiting the scope for further increases in prices”, said National Australia Bank economist John Sharma.
Palladium jumped 0.8% to $1,878.45/oz, platinum gained 0.1% to $800.29 and silver rose 0.2% at $17.55.