Gold Investors Taking Profits

$XAU $GLD $USD

Gold is heading for its biggest weekly decliner since Y 2013, despite climbing to the highest in more than 7 yrs earlier this week, as investors sell the precious Yellow metal to meet liquidity needs.

Stocks have been in free fall for 16 sessions on concerns emergency fiscal and monetary packages will not be enough to stave off a recession due to the coronavirus’ spread that is hitting the world economy.

The sell off in equities has triggered margin calls, with investors looking for opportunities where they can cash in.

At the same time, a stronger USD has dampened gold’s appeal.

At extreme periods of stress, absolutely gold tends not to benefit as much as you’d expect,” a senior commodity strategist at Australia & New Zealand Banking Group Ltd. said in an interview. “Gold looks a pretty good bet over the medium term,” he said. “You could even call a 10% to 15% rally a fairly good possibility in the shorter term.

Spot gold fell as much as 1.6% to 1,551.50 oz, and traded at 1,560.97 at 11:00a in Singapore Friday, following a 3.6% fall Thursday. Prices are down 6.7% this week, after touching 1,703.39 oz Monday, the highest mark since December 2012.

Asian stocks are off Friday after the S&P 500 had its biggest 1-day sell-off since Y 1987 in a wild session that saw market-wide circuit breakers triggered for the 2nd time in a week.

Many investors doubt the efficacy of policy responses as coronavirus cases continue to grow across the world and restrictions on people and businesses hammer sentiment.

Gold investors will turn their attention to the Fed’s upcoming meeting after the central bank made an emergency rate cut last week.

The NY Fed offered a huge injection of liquidity to the Treasury market Thursday in moves reminiscent of its QE program during the financial crisis of Y 2008.

The ECB unveiled a series of monetary policies Thursday that failed to pacify traders.

There’s been some existential issues in play which have resulted in gold getting hammered short term, but when we look at all the things that tend to drive gold prices, they look like they are going to support higher prices, bond yields are falling. We expect to see USD to weaken in here.

Have a terrific weekend

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