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Gold Craters 4%, Poised for Huge Weekly Plunge Amid Market Crash

March 13, 2020 at 17:37 by Andrew Moran

Gold futures are cratering to finish the chaotic trading week, collapsing more than 4% as the rest of the US financial market rebounds. The yellow metal is set for a huge weekly drop as investors sold off their gold holdings to cover their margins. With equities seemingly calm due to central bank action, can the precious metal stage a rally next week?

May gold futures crashed $71.10, or 4.47%, to $1,519.20 per ounce at 17:18 GMT on Friday on the Comex division of the New York Mercantile Exchange. Gold prices are on track for a weekly loss of nearly 6%, wiping out most of their 2020 gains. Year-to-date, gold is still up about 4%.

Silver, the sister commodity to gold, is also continuing its downward trend at the end of the trading week. April silver futures plummeted $1.395, or 8.72%, to $14.61 an ounce. The white metal is poised to record a weekly decline of just under 10%, adding to its YTD loss of 12%.

If there is still global panic and gold is a conventional safe-haven asset, why is the precious metal not rallying?

There are potentially two reasons for gold’s huge crash again. The first is that more investors are liquidating their gold positions to perhaps prepare for a rebound in the broader market. The second is that there is some stability in equities right now, giving traders the opportunity to buy the dip. Whether this is a dead cat bounce or not will be seen on Monday, but investors are scooping up stocks at a huge discount.

Analysts do say gold is a good long-term investment to hold throughout the market turmoil, monetary easing, and overall uncertainty. The Federal Reserve is pumping more than $1 trillion into the US system to fight the economic effects from the coronavirus, and the central bank is widely anticipated to bring interest rates to zero this year. Plus, we might be at the beginning of an oil price war between Saudi Arabia, Russia, and the Organization of the Petroleum Exporting Countries (OPEC).

In other metal markets, April copper futures shed $0.0125, or 0.51%, to $2.46 a pound. April platinum futures dropped $36.70, or 4.69%, to $745.10 an ounce. April palladium futures crashed $349.90, or 18.27%, to $1,565.00 per ounce.

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