Gold Up on Strong Equities

Gold Up on Strong Equities

Gold up on strong equities as the Dow opened up 900 points this morning on news out of Europe that the number of Covid-19 cases and deaths are slowing.

A supply shortage that followed the shutdown of three major gold refineries in Switzerland may be coming to an end after the plants said they have received permission from local authorities to restart at a reduced rate, Bloomberg reported. The plants in the canton of Ticino were shut for almost two weeks because the outbreak and made it hard for some investors to find gold bars, boosting prices.

Precious metals have been caught in a tug-of-war in recent weeks between bullish investors seeking protection against uncertainty and traders cashing out of their positions to cover margin calls in other assets, which pressured prices lower.

The most-active June gold futures contract fell 0.5% last week to settle at $1,645.70 an ounce on Comex, though it advanced 0.5% on Friday. Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose to 978.99 on Friday, the highest level in more than three years, Reuters reported. Currently, the June contract is at $1686.60, while the DG spot price is $1,668.40.

Hedge funds and money managers cut their bullish positions on Comex gold and boosted them for silver in the week ended March 31, according to the weekly Commitments of Traders report published Friday by the U.S. Commodity Futures Trading Commission. May silver futures fell 0.3% last week to settle at $14.49 an ounce on Comex. They dropped 1.1% Friday. Currently, the May contract is $14.93, while the DG spot price is $14.73.

The virus, known as COVID-19, has killed almost 70,000 people worldwide and sickened almost 1.28 million. More than 26% of the cases are now in the U.S., though just 14% of the deaths. The U.S. has more cases than any other country. The virus is a WHO-designated pandemic.

U.S. Surgeon General Vice Admiral Jerome Adams said Sunday that the coming week would be “the hardest and the saddest week of most Americans’ lives.” Speaking on Fox News, he said that “this is going to be our Pearl Harbor moment, our 9/11 moment, only it’s not going to be localized. It’s going to be happening all over the country.”

But numbers from New York showed a one-day decline in deaths, and U.S. President Donald Trump said in a briefing on Sunday that “we’re starting to see light at the end of the tunnel.” Meanwhile, U.K. Prime Minister Boris Johnson was hospitalized for COVID-19, and Japan appeared poised to issue an emergency declaration.

Gold rallied Thursday and Friday as economic data painted a grim picture of the U.S. employment situation. The Labor Department reported that initial jobless claims surged to 6.65 million in the week ended March 28, and that more than 10 million jobs were lost in two weeks because of lockdowns triggered by the pandemic. The unemployment rate shot up to 4.4% in March from a 50-year low of 3.5% in February.

Spot palladium fell almost 7% last week to $2,164.10 an ounce after soaring 38% the prior week. Currently, the DG spot price is $2,171.10. Spot platinum dropped about 3% last week to $725.13 after climbing 21% the prior week. Currently, the DG spot price is $740.30.

 

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