There’s a simple reason that gold is falling along with coronavirus-afflicted global stocks

There’s a simple reason that gold is falling along with coronavirus-afflicted global stocks By MYRA P. SAEFONG for Market Watch

Gold futures trade over 3% lower for the week

Gold prices have been acting a bit strange lately, with the haven metal plunging in the face of a dive in global stock markets hit by the spread of COVID-19 and its impact on the economy in China and around the world.

The precious metal usually finds support as a drop in the stock market tends to lift the haven appeal of gold, with benchmark stock indexes in the U.S., Europe, Asia, Canada, the Middle East and Latin America suffering losses for the week.

This time around, however, given the steep stock-market declines, gold has become the asset of choice among investors to generate cash.

“Investors are selling anything with a bid and running for cover, and that includes typical hedges like gold,” said Brien Lundin, editor of Gold Newsletter.

“We saw similar behavior during the 2008 financial crisis, however, and once investors understood and appreciated the scope of central bank stimulus coming down the pike, they began buying gold,” he said. “The price more than doubled from the lows thereafter.”

On Friday, the most-active April gold futures contract GCJ20, -3.98%  traded at $1,585.80 an ounce, down $56.70, or 3.5%, during the session. It was looking at a weekly loss of 3.8%, and lost a grip on a gain for the month.

****

“This was an extraordinary week and is capitulating into panic selling into many markets including precious metals,” Peter Spina, president and chief executive officer at GoldSeek.com, told MarketWatch. “The gold market has had heavy fund holdings grow heavily over the last several months’ run-up in gold that now, with the general markets selling off, some of that excessive positioning is being shaken out.”

Continue Reading / Market Watch >>>

Sharing is caring!

The Daily Coin

Rory Hall, The Daily Coin and Gospel News Network. Beginning in 1987 Rory has written over 1,400 articles and produced more than 500 videos on topics ranging from the precious metals market, economic and monetary policies, preparedness as well as geopolitical events. His articles have been published by Zerohedge, SHTFPlan, Sprott Money, GoldSilver, Gold Seek, SGTReport, and a great many more. Rory was a producer and daily contributor at SGTReport between 2012 and 2014. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Dr. Warren Coates and Peter Schiff, to name but a few. Don't forget to visit The Daily Coin and Gospel News Network to enjoy some of the best economic, precious metals, geopolitical and preparedness news from around the world.