Gold Falls as Central Banks Drift Away From the Bid Side
Investing.com
Published Mar 31, 2020 11:42AM ET
By Geoffrey Smith
Investing.com -- Gold prices retreated again on Tuesday under pressure from end-of-quarter repositioning, but also from the awareness that emerging market central banks, having been keen buyers of gold in recent years, are now having to push more out into the market to defend their currencies.
At the weekend, the Central Bank of Ecuador said it had raised $300 million through a one-month gold swap which involved pledging 240 thousand ounces of its reserves.
On Monday, the central bank of Russia confirmed widely-held expectations in saying it would stop buying gold from domestic producers on April 1, a move that will bolster its reserves as it fights to stop the ruble depreciating too fast against the dollar and euro. The CBR had already cut its purchases by around 40% last year as gold prices rallied to multiyear highs.
By 11:40 PM ET (1540 GMT), gold futures for delivery on the Comex exchange were down 1.2% at $1,624.20 an ounce, while spot gold was down 0.7% at $1,609.69. Arbitrage opportunities persisted amid reports that gold refiners are still struggling to ship gold to warehouses recognized by key exchanges.
A further factor weighing on gold Tuesday was a second-straight day of gains for the dollar as it recovered its poise from last week’s selloff. A strong dollar drives up the price of gold in local currencies worldwide.
Elsewhere, silver futures rose 0.2% to $14.35 an ounce, while platinum futures rose 1.4% to $733.70.
Other havens were mixed. Long-dated Treasury yields rising in response to President Donald Trump’s announcement via Twitter of plans for $2 trillion in infrastructure spending, an idea that, if ever agreed with Congress, would further embolden gold bulls who believe in the ultimate debasement of all fiat currency.
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