Home Business Gold rises 1% on safe-haven appeal but set for weekly drop

Gold rises 1% on safe-haven appeal but set for weekly drop

Gold rises 1% on safe-haven appeal but set for weekly drop 1

BANGALORE: Gold prices rose 1% on Friday as safe-haven buying offset a rush for cash amid fears over the economic hit from the coronavirus, but bullion was headed for a second weekly drop as investors sold the metal to meet margin calls in other assets.

Spot gold rose 0.8% to $ 1,481.30 per ounce by 0328 GMT after a 1% fall in the previous session and was en route to post a near 3% decline for the week. U.S. gold futures climbed 0.5% to $ 1,486.50.

“Gold continues to maintain its safe-haven properties, and has been performing better than other commodities,“ said John Sharma, an economist with National Australia Bank.

“However, with deep fears of an impending coronavirus-induced recession, investors are flocking to cash, treasuries and the dollar, and shedding some gold holdings to cover margin calls.”

Asian shares sought a reprieve following gains on Wall Street, while the dollar was set for its biggest weekly rise since the 2008 crisis as the epidemic drove a dash for cash.

The U.S. Federal Reserve opened the taps for central banks in nine new countries to access dollars in hopes of preventing the outbreak from causing a global economic rout.

Several countries rolled out measures to stem the economic damage, with the U.S. Senate unveiling a $ 1 trillion economic stimulus plan, while the Bank of England promised 200 billion pounds of bond purchases and cut its key interest rate to 0.1%.

While gold has been reacting to moves in financial markets and at times found support from stimulus measures, “it’s a bumpy ride as liquidity and participation continue to fall by the wayside,“ said Stephen Innes, chief market strategist at AxiCorp, in a note.

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“I’m not so sure this is so much a function of the market, or due to the fact that many gold traders are working at home.”

The global economy is already in a recession as the hit to economic activity has become more widespread, a Reuters poll showed.

The number of Americans filing for unemployment benefits surged by the most since 2012 last week.

Palladium rose 0.5% to $ 1,660.30 per ounce. Platinum jumped 3.1% to $ 604.66 but was set to post its biggest ever weekly fall.

Silver gained 2.6% to $ 12.42, but was on track to post its second steepest weekly decline of about 15% since September 2011. -Reuters

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