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Gold & Other Metals Sink amid Recession Fears

April 15, 2020 at 19:29 by Vladimir Vyun

Metals logged big losses today as markets were concerned about the impact the coronavirus pandemic and measures to contain it had on the global economy. Even gold was unable to profit from its safe-haven status, falling more than 1%.

US macroeconomic reports were extremely poor today, with retail sales demonstrating the sharpest monthly decline on the record. Other reports were bad as well.

The International Monetary Fund predicted a strong global economic recession this year:

As a result of the pandemic, the global economy is projected to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crisis.

If everything goes well and the pandemic starts to subside relatively soon, the global economy should start recovering next year, but that is far from being certain:

In a baseline scenario–which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound—the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalizes, helped by policy support. The risks for even more severe outcomes, however, are substantial.

The traders’ pessimistic mood boosted safe-haven assets, with the US dollar demonstrating big gains and German Bunds and US Treasury yields falling. But as it was often happening during the current crisis, gold was unable to leverage its haven status despite the trading environment being ripe for it.

Futures for delivery of gold in June dropped $24.4 (1.38%) to $1,744.5 per troy ounce as of 19:22 GMT on COMEX today. July contract for silver lost as much as $0.55 (3.34%) of its value to trade at $15.8 per ounce. Spot price for platinum fell $1.96 (0.25%) to $779.24 per ounce, and palladium sank $43.51 (1.95%) to $2,186.63 per ounce. Copper for delivery in May dropped by $0.0335 (1.44%) to $2.296 per pound.

If you have any questions and comments on commodities today, use the form below to reply.

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