Gold tumbled 3% on Tuesday, while other precious metals also extended heavy losses from the previous session, as fears over the global economic toll from the fast-spreading coronavirus prompted investors to dump most assets and hoard cash.
Platinum and silver shed more than 6%, while palladium lost over 4%. Industrial metals were worst hit in Monday’s meltdown on concerns of a global recession.
“Cash and bonds are king right now. It’s just the place where investors are seeing value in terms of what they hold,” OANDA analyst Craig Erlam said, adding precious metals seemed to be the go-to assets for investors liquidating positions.
“Investors hate uncertainty, but at the moment, we’re navigating completely blind. So that’s why we’re seeing so much panic and unrest in the markets.”
Spot gold was down 2.6% to $1,475.26 per ounce at 7:04 GMT, having slumped as much as 5.1% on Monday to its lowest since November 2019. U.S. gold futures were down 0.7% to $1,475.70.
European stocks failed to rebound, following a sharp sell-off in the previous session triggered by panic over coronavirus and its impact on businesses and the economy.
The dollar rose over 1% against rivals, making gold more expensive for holders of other currencies.
The contagion has killed more than 7,000 and infected more than 182,260 people globally and forced countries and major central banks to ramp up measures to protect their economies from the outbreak.
“We believe that a major new factor may weigh on the gold price: the sharply falling oil prices and the increasingly likely economic recession could spark fears among market participants of a deflationary shock. That would be fatal for gold,” Commerzbank analysts said in a note.
by Chad Stone