GOLD DROPS 1% AS STOCK MARKETS RISE AMID INITIAL PROGRESS AGAINST CORONAVIRUS.

Key Points

  • Spot Gold: Decreased by 0.5% to $1,653.25 per ounce, after peaking at $1,671.40, a one-month high. Previously, it surged 2.8% on Monday.
  • SPDR Gold Trust: Holdings increased by 0.5% to 984.26 tonnes on Monday, marking the highest level in over three years.
  • Palladium: Rose by 2.3% to $2,203.36 per ounce after an initial increase of more than 3%.
  • Platinum: Climbed 1.2% to $744.02.

Gold Market Insights

Gold prices dropped by 1% on Tuesday, retreating from earlier gains that pushed it to a one-month high. The decline is attributed to improved risk sentiment in the market due to tentative progress in combating coronavirus outbreaks in certain countries.

Current Statistics:

  • Spot gold declined by 0.5% to $1,653.25 per ounce by 10:24 GMT, after previously hitting $1,671.40.
  • Monday saw gold prices surge as much as 2.8%.

Market Dynamics:

  • Risk Appetite: Renewed due to declining new infections, negatively impacting gold prices. Additionally, higher yields are detrimental to gold.
  • Inflation Fears: Some investors remain attracted to gold, fearing that monetary policy might lead to inflation.

Broader Market Context:

European shares rose for a second day amid cautious optimism about a slowdown in new coronavirus cases, despite ongoing measures by major companies to secure cash flow due to lockdowns.

  • Global Impact: Over 1.32 million global infections and 74,087 deaths reported. British PM Boris Johnson was moved to intensive care as his condition worsened.
  • Financial Market Reaction: The pandemic has significantly disrupted global financial markets, leading to extended lockdowns worldwide.

Notable Developments:

  • Japan: PM Shinzo Abe prepared to declare a state of emergency in Tokyo and six other prefectures, alongside plans for a stimulus package to support the economy.
  • Investor Sentiment: Central bank stimulus and fiscal spending have boosted gold investors’ confidence, despite rising government debt levels.

Market Indicators:

  • SPDR Gold Trust: Holdings increased to 984.26 tonnes, the highest in over three years.
  • U.S. Gold Futures: Increased by 0.5% to $1,703, indicating concerns over refinery closures and logistics issues potentially affecting bullion shipments to the U.S.

Other Metals:

  • Palladium: Increased by 2.3% to $2,203.36 per ounce.
  • Platinum: Rose by 1.2% to $744.02.
  • Silver: Jumped by 1.1% to $15.15 per ounce, hitting a more than three-week high earlier.