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Gold Slumps 1% on Strengthening Dollar, Market Confidence

March 31, 2020 at 15:56 by Andrew Moran

Gold futures are sliding as much as 1% on Tuesday as a strengthening US dollar and market stability are hampering the yellow metal. As the rest of the financial markets will record one of the worst months and quarters on record due to the coronavirus pandemic, gold will post a remarkable performance. Can the precious metal maintain its gains or it will retreat amid ballooning market confidence?

June gold futures tumbled $17.10, or 1.04%, to $1,625.90 per ounce at 15:30 GMT on Tuesday on the Comex division of the New York Mercantile Exchange. Gold will report a 2.25% increase in March and a 7.1% spike in the first quarter. Year-to-date, prices are up just under 7%.

Silver, the sister commodity to gold, is mustering up a rally to finish off a dreadful month and quarter. May silver futures rose $0.18, or 1.28%, to $14.31 an ounce. The white metal suffered a 14% loss this month, as well as a 20% drop during the January-to-March period. Prices have plunged 20% YTD.

Gold has come under pressure as of late on renewed economic confidence and a strengthening US dollar.

Financial markets have rebounded over the last week after enduring one of the worst times in history. After the Federal Reserve launched unlimited quantitative easing and the US government unleashing a $2.2 trillion stimulus bill – both of which pump tremendous liquidity into the system – the leading US stock indexes are gradually recovering. China’s surprising manufacturing growth in March also lifted equities on Tuesday.

Despite the myriad of other bad news, a lot of experts say the market has bottomed. At the very least, there is a lot more certainty.

Although the US dollar has declined around 3% over the last week, the greenback is making a modest comeback this week. The US Dollar Index, which measures the greenback against a basket of currencies, added 0.04% to 99.23, from an opening of 99.19. A stronger buck is bad for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.

Rising bond yields impacted precious metals, too. The benchmark 10-year Treasury has rebounded after hitting an all-time low of 0.318%. When Treasurys offer a higher yield, T-notes and T-bills draw investors away from non-yielding bullion.

The Russian central bank announced that it would stop buying gold on Wednesday, refusing to provide an explanation behind the move. Moscow has been one of the most consistent gold buyers since the Great Recession, amassing one of the biggest gold reserves in the world.

In other metal markets, May copper futures surged $0.04, or 1.9%, to $2.1965 per pound. May platinum futures picked up $6.80, or 0.94%, to $730.60 an ounce. May palladium futures soared $103.40, or 4.71%, to $2,301.00 per ounce.

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