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Gold Wipes Out Losses As Investors Weigh COVID-19 Future

April 13, 2020 at 16:51 by Andrew Moran

Gold futures wiped out their intraday losses to kick off the trading week as investors weigh on the global economic recovery in the post-coronavirus world. The yellow metal has slumped to kick off the trading session, but it has since rebounded as traders assess the G7’s fiscal and monetary response to containing the financial damage and spur growth.

June gold futures picked up $5.70, or 0.33%, to $1,758.30 per ounce at 16:23 GMT on Monday on the Comex division of the New York Mercantile Exchange. Gold prices fell as much as $25 at the opening bell. Last week, the precious metal surged 6% and added to its year-to-date surge of 16%.

Silver, the sister commodity to gold, is sliding to start the first session after the Easter long weekend. May silver futures plunged $0.43, or 2.7%, to $15.62 an ounce. The white metal recorded a weekly jump of 8% last week, paring its YTD decline to under 13%.

Investors may have been taking the profit early on, but consternation regarding monetary expansion may have been in focus. Central banks – the Federal Reserve, the European Central Bank (ECB), the Bank of Canada (BoC), the Bank of Japan (BoJ), and others – have purchased hundreds of billions of dollars in net assets since March. This has triggered fears over price inflation on the other side of the lockdown. The US central bank has unleashed unlimited quantitative easing, and it recently announced a $2.3 trillion Main Street lending program to shore up small- and medium-sized businesses.

Also, what is often lost in the analysis is that interest rates are at 0%, which is a boon for non-yielding bullion.

These measures have stabilized financial markets, and Goldman Sachs believes the leading stock indexes will not hit fresh lows because of the “whatever it takes” measures. Still, traders understand the risks of what the Fed and Congress are doing. The precious metal only cratered last month because investors liquidated everything and searched for cash. Some analysts anticipate gold will reach $2,000 by the end of the year – or sooner.

Gold also gained on a weaker US dollar as it dipped 0.04% to 99.48, from an opening of 99.52. A lower buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

In other metal markets, May copper futures tacked on $0.045, or 1.99%, to $2.3045 an ounce. May platinum futures were flat at $748.80 per ounce. May palladium futures rallied $45.30, or 2.15%, to $2,155.30 per ounce.

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