Gold Holding Over $1,500

Gold Holding Over $1,500

Gold holding over $1,500, as the stock market kicks off another wild day. The Dow opened over 1,000 points down and is still over 800 down as the stimulus high wears off.

Gold had risen Tuesday amid signals that governments and central banks would act to support the global economy, hit hard by the coronavirus crisis. The yellow metal lost some steam over night on profit taking and global concerns.

U.S. President Donald Trump is pushing for $1.2 trillion in stimulus and to send checks of $1,000 to each American within weeks. The market has faced a liquidity crunch in recent weeks as shutdowns around the world threatened to derail the economy. Treasury Secretary Mnuchin warned this morning that this emergency could lead to 20 million unemployment in the U.S.

This morning, the White House announced that the border between the U.S. and Canada would be closed to non-essential traffic by mutual consent. This follows the overnight news that the coronavirus has now been found in all 50 states.

April gold futures rose 2.6% Tuesday to settle at $1,525.80 an ounce on Comex. It advanced 0.6% in the first two days of this week. The yellow metal started last week by climbing above the $1,700-an-ounce threshold for the first time in more than seven years, before being hit by the liquidity crunch and Friday’s equities rally. Currently, the April contract is at $1,508.70.

Investors continue to be spooked by the escalating impact of the novel coronavirus on the global economy. The coronavirus, designated COVID19, has killed almost 7,500 people worldwide and sickened almost 188,000. The first cases were in China, but the number of global infections has now outstripped it. The virus is a WHO-designated pandemic.

Goldman Sachs Group Inc. and Morgan Stanley economists have declared that the coronavirus has triggered a global recession, and the only questions remaining are how bad it will be and how long it will last.

The Fed, which has reduced interest rates to almost zero with two surprise cuts in as many weeks, has signaled it will intervene in short-term credit markets by reinstating a funding facility used during the 2008 financial crisis. The move is designed to get credit straight to businesses and taxpayers. The U.K. launched a new lending scheme for bridge financing for large businesses, and Japan’s prime minister plans to form a panel of key ministers to discuss measures to prop up the economy, Reuters reported.

Stock futures on the S&P 500 Index and Dow Jones Industrial Average slid early Wednesday, giving back some of Tuesday’s gains. The U.S. stock market had its worst losses in a single day since 1987 on Thursday and fell into a bear market, though prices recovered some since.

The coronavirus has halted economic and other activity in much of the world, with some of the direst reports coming from Italy and Spain, which are on total lockdown. Cities and states around the U.S. continued to close to all but the most essential activities, and global travel curbs mounted.

In economic news, weekly initial jobless claims and February leading economic indicators are scheduled for Thursday.

May silver futures dropped 2.5% Tuesday to settle at $12.50 an ounce on Comex and are down 14% in the first two days of this week. Spot palladium, which decreased 30% last week, rose 3.2% Tuesday to $1,652.33 an ounce. It’s down 8.9% in the first two days of the week. Spot platinum slid 0.3% Tuesday to $763.28 an ounce and fell 13% in the first two days of the week.

 

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