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.”
“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.
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