March 24, 2020
Gold jumps 2 percent as Fed bonanza stalls cash rush
(Reuters) - Gold rose 2% on Tuesday, extending gains from a near 4% surge in the previous session, after the U.S. Federal Reserve's unprecedented measures to help an economy reeling from the coronavirus pandemic halted a rush for cash.
Spot gold rose 1.3% to $1,573.17 per ounce by 0333 GMT. The metal rose 3.7% on Monday, its highest percentage gain since June 2016.
U.S. gold futures rose 1.5% to $1,590.50.
"Gold is surging higher after the Fed went above and beyond in unveiling measures to support the economy," said Edward Moya, a senior market analyst at broker OANDA.
The U.S. central bank on Monday rolled out an extraordinary array of programs and will lend against student loans, credit card loans, and U.S. government backed-loans to small businesses.
That failed to push Wall Street higher on Monday, but it was enough to drive a rebound in Asian shares.
Meanwhile, a coronavirus economic stimulus package, remained stalled in the U.S. Senate on Monday as lawmakers haggled over its provisions, but the U.S. Treasury secretary voiced
confidence a deal would be reached soon.
"The U.S. Senate setback seems only temporary and gold traders are feeling pretty confident that at the end of the week, massive fiscal and monetary stimulus should help calm markets. If market volatility stabilizes somewhat, gold will resume its safe-haven status," said OANDA's Moya.
President Donald Trump said on Monday he is considering how to reopen the U.S. economy when a 15-day shutdown ends next week, even as the virus spreads rapidly.
Global central banks took various measures to mitigate the damage of the outbreak, which has infected over 351,300 and killed more than 15,300 people globally.
Australia's central bank proposed to buy $2.35 billion in government bonds and Germany agreed for a package worth up to $808 billion.
Also propping up bullion markets was the closure of three of the world's largest gold refineries in Switzerland due to the outbreak that has squeezed supply of the physical metal, Stephen
Innes, chief market strategist at financial services firm AxiCorp, said in a note.
"There is just not enough around to support the underlying promissory notes (paper gold)... It's a godsend for bullion investors."
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust , rose 1.8% to 923.99 tonnes on Monday.
Palladium surged 7% to $1,840.03 per ounce, silver jumped 5.1% to $13.92 and platinum rose 2.5% to $658.23 per ounce.