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Gold Slumps on Profit-Taking, Poised for Best Week Since 2008

March 27, 2020 at 17:15 by Andrew Moran

Gold futures are slumping at the end of the trading week as investors potentially hit the sell button and took the profits, which is evident in the broader market on Friday. The yellow metal is still on track for its best week in more than a decade, driven by investors seeking shelter from the global market chaos.

April gold futures tumbled $20.60, or 1.4%, to $1,630.60 per ounce at 16:56 GMT on Friday on the Comex division of the New York Mercantile Exchange. Despite the big drop, gold is poised for a weekly gain of around 9%, lifting its year-to-date jump to 7.3%. This is the best weekly performance since 2008.

Silver, the sister commodity to gold, is also in the red to finish the trading week. May silver futures shed $0.085, or 0.58%, to $14.59 per ounce. The white metal will record a weekly surge of about 15%, lowering its YTD decline to roughly 18%.

Precious metals likely slipped on Friday because investors cashed out and took the profits since there is still so much uncertainty. At the same time, gold could test $1,700 next month with central banks cutting interest rates, expanding money supplies, and growing their balance sheets. With trillions of dollars in liquidity pumped into the system, traders might use the money to build positions in metal commodities.

A boon for gold is declining physical supply. Refineries around the world have slowed down output or suspended activity because of the coronavirus pandemic.

Although gold failed to take advantage of the big decrease in the US dollar on Friday, the yellow metal benefited from the 4% decline in the greenback this week. The US Dollar Index, which measures the buck against a basket of currencies, fell 0.52% to 98.84, from an opening of 99.29. A falling greenback is good for commodities priced in dollars since it makes it cheaper for foreign investors to purchase.

Disappointing US economic data failed to offer support for gold. The University of Michigan’s US consumer sentiment index slid from 101.0 in February to 89.1 in March.

In other metal markets, May copper futures dipped $0.0065, or 0.3%, to $2.1715 per pound. May platinum futures picked up $5.10, or 0.69%, to $742.20 an ounce. May palladium futures plunged $57.60, or 2.59%, to $2,168.50 per ounce.

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