Gold prices fell in the trading session Monday (27 / April) tonight, in line with rising investor risk sentiment due to the slowing of the Corona case. Even so, the price of gold is still supported by economic stimulus policies.
The price of gold futures on the Comex in New York was unable to withstand the pressure, resulting in a 0.5 percent decline to 1,726.70. Meanwhile, spot gold prices weakened 0.8 percent to 1,712.99 at 15:08 GMT. The decline has slowed compared to the previous session which reached 1.3 percent to a low level of 1,704.45. The XAU / USD chart below also shows a 0.9 percent decline to 1,711.78.
US Treasury bond yields rose at the opening session of the market today, thereby pushing down the price of gold. According to Suki Cooper, an analyst from Standard Chartered Bank, macro background generally still supports bullish gold in the short term. However, he did not dismiss that the plan to reopen economic activity will have an impact on the decline in safe-haven demand.
"Safe-haven purchases still support the price of gold, mainly through ETF inflows and demand from retail investors ... (however) if we see economies begin to reopen, it is likely to begin to ease demand for safe havens," Cooper said.
Countries That Loosen Lockdown Increases, Gold Slips Slightly
Countries that will restart economic activity and loosen lockdown rules are reportedly growing. However, some parties believe that even though the spread of the coronavirus is slowing, the economy is in doubt able to skyrocket quickly once the lockdown is ended.
"Even if the lockdown is stopped, the world is far from normal. The greater risk then is the economic collapse," wrote the Commerzbank analyst team. "To overcome this, governments in all countries are likely to continue spending large amounts of money - most of which will be created by the central bank. Gold will still get demand with a function as a crisis currency under these conditions, and as reflected in the flow enter ETF. "
The price of gold slipped slightly in the trading session Friday (24 / April), but with a trend that is still stable at a high level one week. Weak economic data from developed countries and the latest stimulus from the United States, hold gold from the bullish exposure of the US Dollar.
Spot gold prices fell 0.4 percent to 1,724.04. This move is a correction from a 1.5 percent increase that previously drove spot gold to 1,738.58, the highest for more than one week. At the time of writing, the following XAU / USD chart shows that gold is trading at 1,727.99, down 0.12 percent from the daily Open level.
Economic Stimulus Cause Gold Drop Sharp
Economic data in developed countries is still weak due to the lockdown policy to stop the spread of the Coronavirus. The UK reported PMI data which worsened below expectations, while the United States reported weekly jobless claims at 4,427,000, disappointing expectations of a reduction of 4,350,000.
Meanwhile, the US Flash Manufacturing PMI data for April is still in a contraction area. Even though it was higher than expected, the Markit released data dropped further compared to the previous month. This condition is one of the pillars of demand for gold, although the US Dollar remains bullish ignoring the results of these data.
Another factor holding back the price of gold from a sharp drop is economic stimulus. The US House of Representatives approved the Corona Virus Act which requires a budget of US $ 484 million. The signing of the Law on Handling Crisis has increasingly inflated US government spending to nearly US $ 3 trillion.
According to analysts from Saxo Bank, Ole Hansen, the gold market is expected to hold in the range of 1,700 so far this year. The reason is that investors are well aware of the effect of the central bank or government stimulus on the financial markets going forward.
