Coronavirus COVID-19: Gold falls on profit-booking, virus-led economic fears limit losses
Gold edged down on Monday as investors booked profits after prices hit a one-month high last week, while worries over a coronavirus-driven steeper global economic downturn and the US Federal Reserve`s stimulus measures limited bullion`s losses.
Spot gold slipped 0.4% to $1,681.49 per ounce by 0239 GMT. US gold futures fell 1.4% to $1,728.40.
There is “a bit of a post-weekend profit-taking. (There is) no follow through topside as equity markets are trading more neutral and the dollar remains relatively firm,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.
Commodity currencies slipped against safe-haven units such as the dollar and yen as a record output cut agreed by major oil producing nations failed to offset broader concerns about global demand for resources, while world shares fell as investors braced for more economic damages from the novel coronavirus pandemic.
Gold prices rose to their highest since March 9 on Friday, lifted by bleak U.S. weekly jobless claims numbers, which underscored the deeper economic impact from the pandemic.
In a bid to keep the economy afloat amid the outbreak, which had forced 16.8 million Americans to file for unemployment benefits since the week ended March 21, the Fed on Thursday announced a broad, $2.3 trillion stimulus package.
“The Fed stimulus is a magnet for gold. Not only does it improve the opportunity cost for holding gold but at some stage it will eventually water down the dollar,” Axicorp`s Innes said.
European Union finance ministers also agreed on half-a-trillion euros worth of economic support but left open the question of how to finance recovery in the bloc headed for a steep recession.
Meanwhile, major physical bullion hubs saw activity dwindle last week due to coronavirus-led restrictions, with strained supply chains cut off from soaring safe-haven demand in some regions.
Reflecting appetite for bullion, holdings in SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, rose 0.6% to 994.19 tonnes on Thursday.
Palladium rose 3.3% to $2,243.26 per ounce, while platinum slipped 1.2% to $739.15 and silver eased 0.5% to $15.24.
