Fundamental Comment

Gold slumps as corona crisis prompt investors to seek cash

Gold slumps as corona crisis prompt investors to seek cash

Gold continued to fall during Tuesday's trading, losing more than $27 of its value, amid continued selling of among all assets, as the panic from the coronavirus spread prompted investors to resort to cash.  

As of 07:39 GMT, spot gold hovered around $1,485.55 per ounce, where the precious metal hit the lowest level since September 28, 2019 at $1450.90 during yesterday’s trading session.

The losses in the yellow metal come amid heightened concerns about economic losses caused by the coronavirus outbreak, prompting investors to seek cash.

In a surprise move on Sunday, the Fed cut interest rates by nearly 100 basis points in an effort to calm markets but it seems that the second emergency move failed to tranquil distressed markets.

Later in the day, the U.S. retail sales, industrial production and the number of jobs available in the United States are scheduled to be released.

The coronavirus continued to spread globally, with the number of infections exceeding 170,000 cases worldwide and the death of more than 6,500 people.

As for other precious metals, silver slumped by 1.28 percent to $12.75 an ounce, after hitting the lowest level since 2009 in the previous session at $11.80.

Palladium descended by 4.23 percent to trade at $1,450 an ounce, while platinum went in the opposite direction by increasing about one percent at $661.25.

The dollar index, which tracks the performance of the U.S. currency against a basket of six major currencies, advanced 0.32 percent at 98.46, to complete its good performance in the last five sessions.

The rise in the U.S. dollar exerted further pressure on commodities, especially gold that failed to gain demand as an alternative investment for the dollar.

Industrial metals were most hit by the sell off, given the rising fears that a global recession would cut demand from businesses and households.

Gold is meanwhile trading below daily SMA 200 depicted at $1498, but the metal is shielded by strong support located at $1450.

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