Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold tumbled 4.6% to close under $1,557 as the global spread of the coronavirus fueled panicked selloffs in equity markets, forcing traders to cash-in liquid assets to cover margin calls in other investments. The metal lost 5% for the week and 1.3% for the month.

With COVID-19 cases rising rapidly outside of China, the World Health Organization warned today that outbreak has risen to the "highest level" of risk to the world. South Korea, Iran, France, Germany, and the US have reported new cases. Japan declared a state of emergency on Hokkaido.

Financial markets, hammered again, were on course for their worst week since the financial crisis in 2008. All three major indexes have fallen into correction territory, defined as a 10% drop from recent peaks. Goldman Sachs warned yesterday that US firms will generate no earnings growth in 2020.

The plunge has triggered margin calls on leveraged investments, forcing hedge funds and other speculators to find cash wherever available to cover losses as the books close on February. One of the most liquid assets, gold was an easy target, especially given its dramatic rise in recent weeks.

Treasury yields fell for the seventh day on flights to safety, driving the benchmark 10-year Treasury to a new all-time low of 1.156%. The dollar lost another 0.4% as the safe-haven yen, enjoying its best day since May 2017, hit a seven-week high.

Once the current technical correction runs its course, gold is expected to regain its footing as a leading safe-haven asset. Falling bond yields make it more attractive because they reduce opportunity costs for holding the metal, which provides no yield of its own. A weaker dollar supports gold and other commodities by making them less expensive overseas.

The other precious metals were sharply lower for the day and mixed for the month. Silver plunged 7.2% for a weekly drop of 11.6% and a monthly loss of 9%. Platinum lost 4.5% today and 10% this month while palladium fell 8.1% on the day but still rose 12% this month.

At the Comex close: April gold plunged $75.80 to $1,566.70; May silver tumbled $1.28 to $16.46; April platinum fell $40.80 to $864.70; and June palladium dumped $220.60 to $2,491.10 an ounce.