March 20, 2020
Gold rises 1 percent on safe haven appeal but set for weekly drop
(Reuters) - Gold prices rose 1% on Friday as safe-haven buying offset a rush for cash amid fears over the economic hit from the coronavirus, but bullion was headed for a second weekly drop as investors sold the metal to meet margin calls in other assets.
Spot gold rose 0.8% to $1,481.30 per ounce by 0328 GMT after a 1% fall in the previous session and was en route to post a near 3% decline for the week. U.S. gold futures climbed 0.5% to $1,486.50.
"Gold continues to maintain its safe-haven properties, and has been performing better than other commodities," said John Sharma, an economist with National Australia Bank.
"However, with deep fears of an impending coronavirus-induced recession, investors are flocking to cash, treasuries and the dollar, and shedding some gold holdings to cover margin calls."
Asian shares sought a reprieve following gains on Wall Street, while the dollar was set for its biggest weekly rise since the 2008 crisis as the epidemic drove a dash for cash.
The U.S. Federal Reserve opened the taps for central banks in nine new countries to access dollars in hopes of preventing the outbreak from causing a global economic rout.
Several countries rolled out measures to stem the economic damage, with the U.S. Senate unveiling a $1 trillion economic stimulus plan, while the Bank of England promised 200 billion
pounds of bond purchases and cut its key interest rate to 0.1%.
While gold has been reacting to moves in financial markets and at times found support from stimulus measures, "it's a bumpy ride as liquidity and participation continue to fall by the
wayside," said Stephen Innes, chief market strategist at AxiCorp, in a note.
"I'm not so sure this is so much a function of the market, or due to the fact that many gold traders are working at home."
The global economy is already in a recession as the hit to economic activity has become more widespread, a Reuters poll showed.
The number of Americans filing for unemployment benefits surged by the most since 2012 last week.
Palladium rose 0.5% to $1,660.30 per ounce. Platinum jumped 3.1% to $604.66 but was set to post its biggest ever weekly fall.
Silver gained 2.6% to $12.42, but was on track to post its second steepest weekly decline of about 15% since September 2011.