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Coronavirus: Gold nosedives 1% as investors resort to cash stockpiling

Gold prices today: Yellow metal fell about 3 per cent on Wednesday along with other precious metals

twitter-logo Reuters        Last Updated: March 19, 2020  | 13:08 IST
Coronavirus: Gold nosedives 1% as investors resort to cash stockpiling
US gold futures fell 0.7 per cent to $1,467.70 per ounce

Gold prices fell more than 1 per cent on Thursday in volatile trade, as investors sought to hoard cash in unstable market conditions despite additional measures from the European Central Bank to deal with the economic fallout from the coronavirus outbreak.

Spot gold slid 1.3 per cent to $1,466.20 per ounce by 0327 GMT after rising 1 per cent in early trade. The metal fell about 3 per cent on Wednesday along with other precious metals. US gold futures fell 0.7 per cent to $1,467.70 per ounce.

"It's about containing the virus and restoring confidence in economic activity," said DailyFx currency strategist Ilya Spivak.

"All these supports are geared to boost the economy when the virus is contained but in the near term, that's difficult as no amount of credit easing would contain a virus. It'll just make it easier for the economy to recover after it's contained."

The dollar surged close to a three-year high hit in the previous session, while bonds plunged and stocks struggled to find their footing as the ECB's latest stimulus provided only brief solace at a time when the world grapples to contain the pandemic.

The ECB launched a 750 billion euro ($818 billion) emergency bond purchase programme on Wednesday to push down borrowing costs in a bloc struggling with the economic fallout of the virus. Governments and central banks across the world are taking measures to combat the damage to the global economy from the epidemic.

The Japanese government is expected to lay out economic packages, while Germany's Chancellor urged its citizens to adhere to rules aimed at reducing social contact.

US President Donald Trump moved to accelerate production of desperately needed medical equipment to battle the outbreak and said an estimate that US unemployment could conceivably reach 20 per cent was a worst case scenario.

The US Senate overwhelmingly passed legislation providing billions of dollars to limit the damage from the outbreak through free testing, paid sick leave and expanded safety-net spending.

"Bullion owners in any form, physical, paper or scrap, will probably continue to liquidate in order to boost capital levels, the more protracted the COVID-19 global lockdown extends," Stephen Innes, chief market strategist at AxiCorp, said in a note.

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Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust , fell 0.66 per cent to 923.69 tonnes on Wednesday.

Palladium was 4.2 per cent lower at $1,520.51 per ounce after sliding more than 5 per cent earlier, while platinum fell for a seventh-straight session and was last continue to liquidate in order to boost capital levels, the more protracted the COVID-19 global lockdown extends," Stephen Innes, chief market strategist at AxiCorp, said in a note. Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust , fell 0.66 per cent to 923.69 tonnes on Wednesday.

Palladium was 4.2 per cent lower at $1,520.51 per ounce after sliding more than 5 per cent earlier, while platinum fell for a seventh-straight session and was last down 3.4 per cent to $603.06.

Silver hovered close to an eleven-year low hit in the previous session, falling 0.6 per cent to $11.91 an ounce.

Also read: Coronavirus Live Updates: PM Modi to address nation on COVID-19 today

Also read: Gold price today: Yellow metal falls to Rs 39,000 as market turns red

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