April 6, 2020 / 3:50 PM / 2 months ago

PRECIOUS-Gold jumps 2% as virus-led economic toll fuels stimulus measures

 (Updates prices)
    * Japan prepares $990 bln stimulus package to soften
economic blow
    * SPDR Gold holdings hit highest in more than 3 yrs on
Friday

    By Sumita Layek
    April 6 (Reuters) - Gold prices surged over 2% to a more
than three-week high on Monday on expectations of global
stimulus measures to counter the economic damage caused by the
outbreak of the novel coronavirus.
    Spot gold        was up 2.3% at $1,653.35 per ounce by 1:49
p.m. EDT (1749 GMT), having hit its highest level since March 11
at $1,655.69 earlier in the session. 
    U.S. gold futures        settled 2.9% higher at $1,693.90.
    "Physical demand continues to dominate and support gold
prices. Massive amounts of stimulus are effectively diluting
currencies so gold demand is coming from all directions," said
Phil Streible, chief market strategist at Blue Line Futures in
Chicago.
    The U.S. dollar stalled against most currencies but
continued its rise versus the Japanese yen as the rate of deaths
from coronavirus in Europe slowed while deaths in Japan and
elsewhere in Asia accelerated.       
    Japan is to impose a state of emergency in Tokyo and six
other prefectures as early as Tuesday to contain the
coronavirus, while the government prepares a $990 billion
stimulus package to soften the economic blow.             
    The pandemic has infected more than 1,250,000 people around
the world, with over 68,400 deaths, according to a Reuters
tally.             
    The coronavirus is the European Union's biggest test, German
Chancellor Angela Merkel said on Monday, adding that it was
important that the bloc emerges strong from the economic crisis
unleashed by the pandemic.             
    Governments and central banks around the world have
unleashed unprecedented fiscal and monetary stimulus and other
support for economies floored by the coronavirus pandemic.
            
    "We think the set-up for a multi-year bull market is being
cemented as the market is awash with both monetary and fiscal
stimulus while rates are at the zero bound," analysts at TD
Securities said in a note.
    "Which suggests investors will continue to seek gold's warm
embrace as real global rates become entrenched in negative
territory."
    Reflecting investor sentiment, holdings of the world's
largest gold-backed exchange-traded fund, SPDR Gold Trust      ,
rose 0.7% to 978.99 tonnes on Friday - the highest in more than
three years.          
    Meanwhile, the enhanced delivery gold futures contract
launched by CME Group Inc        , enabling delivery of
100-ounce, 400-ounce, or kilo bars, has also started trading.
            
    Among other precious metals, autocatalyst palladium       
was down 1.7% at $2,151.01 per ounce.
    Platinum        gained 1.9% to $734.02 per ounce, while
silver        climbed 3.3% to $14.86 per ounce, having earlier
hit its highest since March 16 at $14.91.

 (Reporting by Sumita Layek and Eileen Soreng in Bengaluru
Editing by Matthew Lewis and Marguerita Choy)
  
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