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Gold resumes losing streak as volatility roils global markets
[MELBOURNE] Gold resumed losses in volatile trading across markets as governments and central banks flagged they'll take more aggressive action to handle the economic fallout of the coronavirus outbreak.
Prices fell as much as 1.1 per cent, erasing earlier gains. Bullion had dropped for five days through Monday as traders sold the metal to cover margin calls in other markets. US stock futures once again fell by their limit after the index gained 6 per cent on Tuesday.
"The sharp rise in US markets on Tuesday had briefly relieved the mad scramble for cash, likewise supporting gold prices into the Wednesday session," said Pan Jingyi, a market strategist at IG Asia in Singapore. "It may still be too early to call a bottom with the highly volatile markets we have on hand. Even as we expect gold prices to trade higher given its safe haven appeal, in the very short-term prices may continue to be whipsawed alongside the market."
Traders are weighing the effectiveness of a wave of fiscal and monetary stimulus to try and stem the economic damage from the virus pandemic. The Federal Reserve signalled on Tuesday it will intervene in short-term credit markets, while the Trump administration is discussing a plan that could amount to as much as US$1.2 trillion in spending, including direct payments of US$1,000 or more to Americans within two weeks.
Spot bullion was 0.7 per cent lower at US$1,517.61 an ounce at 2.04pm in Singapore, after earlier gaining as much as 1.2 per cent. The metal tumbled on Friday to cap the steepest weekly loss since 1983. Holdings in gold-backed exchange-traded funds declined for a third day on Tuesday, according to initial data compiled by Bloomberg.
In other precious metals, silver dropped 0.9 per cent, platinum fell 0.6 per cent and palladium slumped 3.3 per cent.