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Gold Struggles to Regain Mojo Despite Continued Meltdown in Stocks

CommoditiesFeb 27, 2020 03:41PM ET
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© Reuters.

By Barani Krishnan

Investing.com – Gold prices were little changed a second day in a row on Thursday as profit-taking prevented the yellow metal from regaining the momentum that took it to seven-year highs this week, despite Wall Street’s continued meltdown.

Gold futures for April delivery on New York’s COMEX settled down just 60 cents at $1,642.50 per ounce.

Spot gold, which tracks live trades in bullion, was up $1.20, or 0.1%, at $1,640.78 per ounce by 2:50 PM ET (17:50 GMT).

On Wall Street, the three major stock indexes lost about 3% each, tumbling for a sixth-straight day. Goldman Sachs (NYSE:GS) said U.S. companies were unlikely to generate earnings growth in 2020 due to the impact of the coronavirus.

With Wall Street’s continued carnage, some analysts were surprised by the sudden loss of mojo in gold, which so far seemed the best hedge for the crisis.

“Gold is only modestly higher as the latest run of outbreak fears was met with profit-taking,” Ed Moya, analyst at New York’s OANDA, said in a note on Thursday, noting that a record long streak of buying in gold ETFs had also come to an end.

Despite the pause, many expect the yellow metal to regain the steam that took it to seven-year highs of nearly $1,700 an ounce on Monday.

“Gold will be bolstered by pandemic fears, central bank and government stimulus, trade angst, and political uncertainty,” Moya added. “Gold will eye the $1,700 an ounce level over the next couple weeks as the coronavirus outbreak worsens.”

TD Securities said there was a pullback across the board in precious metals, noting that silver, platinum and palladium were all under pressure.

“Gold also remains at risk of consolidation, as the bullish narrative has reached widespread consensus, with more traders long than ever, each of whom holds an outsized position, leaving nearly no traders left short,” it said.

“However, we do not expect systematic trend followers to liquidate their gold length any time soon, as algos remain well positioned for the uber-bullish momentum signals.”

Many also expect gold to chart new highs amid bets that the Federal Reserve will be forced into another round of protective rate cuts to protect the U.S. economy from the effects of the coronavirus. The Fed just ended an easing cycle in December after cutting rates back-to-back in three months.

Gold Struggles to Regain Mojo Despite Continued Meltdown in Stocks
 

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Comments (10)
Rana Hamid
Rana Hamid Feb 28, 2020 5:47AM ET
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Gold going towards 1595
Jack Drummond
Jack Drummond Feb 27, 2020 11:15PM ET
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Because you got us a corrupt president looming over a corrupt market.
James Swarbrick
theboxseat Feb 27, 2020 6:43PM ET
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Why are lies printed as being fact
cran Vivid
cran Vivid Feb 27, 2020 6:24PM ET
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Junior Gold Miners Bull (JNUG) is down 20% today with the market free fall and gold slightly in green...Isn't it too sketchy...even with Wall Street norm! ;)
John Richardson
John Richardson Feb 27, 2020 5:51PM ET
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Gold is not a good investment. End of story.
Deepak Mehta
DMEHTA Feb 27, 2020 5:45PM ET
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Yes right when fraudsters print paper gold contracts and dump this is what happens. Anoth JPM style manipulation to keep gold lower so smart money can buy or cbs can buy.
Alex Plawa
Alex Plawa Feb 27, 2020 5:45PM ET
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Can you explain the JPM manipulation to me? I think you are right on the money here.
FRANK FASULO
FRANK FASULO Feb 27, 2020 5:12PM ET
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what a lie gold's going no we're.
Shlomo Habibian
Shlomo Habibian Feb 27, 2020 5:12PM ET
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where*
John Patrick
John Patrick Feb 27, 2020 4:31PM ET
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Lots of Manipulation Mojo though. The usual sell off near closing
Heine Pedersen
Heine Pedersen Feb 27, 2020 4:28PM ET
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Insane level of manipulation in plain sight. Probably in an attempt to make people buy dollars instead of gold, silver and platinum. And you're wrong about palladium. It goes up no matter what. The whole precious metal market is nuts at the moment.
Andrew carson
Andrew carson Feb 27, 2020 4:15PM ET
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Which makes no sense at all.
 
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