Gold Dips in New Safe Role of Providing Margin Cover for Stocks
Investing.com
Published Mar 11, 2020 03:43PM ET
By Barani Krishnan
Investing.com - Gold is still a safe bet, for those need to cover margins on a tumbling Wall Street.
Investors in bullion as well as futures of the yellow metal dumped their holdings in the safe haven on Wednesday to cover margins for stock markets spooked by the global spread of the novel coronavirus.
Gold futures for April delivery on New York’s COMEX settled down $17.70, or almost 1%, at $1,641.40 per ounce. It was a second-straight day of losses for April gold after it jumped as much as 1.3% earlier in the day.
On Wall Street, the S&P 500 fell 5%, wading into bear-market territory and snapping a record decade-long bull run, amid fears that the spread of the coronavirus is far from over and its impact on the global economy could be worse than feared. Stocks also slumped as stimulus efforts to shield U.S. growth failed to assuage investors.
April gold briefly hit a 7-year high of $1,703.90 on Monday as turmoil across global markets from the crash in oil prices renewed the yellow metal’s charge higher after the last week’s rally of 7%.
“Gold is still in the early stages of a major bull run,” said Ed Moya of online trading platform OANDA. “In this battle of king of the safe-haven trade, gold will have an easier time to the $2,000 an ounce level than the 10-year Treasury yield will have falling to zero.”
“The dollar is about to become a funding currency and gold should see tremendous upside as long as the Fed does not deliver a policy mistake,” Moya said, adding that next week will be key for the yellow metal amid bets the Federal Reserve will cut rates again by a half point.
Get The News You Want
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.