Banking & Finance
Gold Slides Toward $1,700 as Economies Show Signs of Restarting
(Bloomberg) — Gold fell for a third day as a drumbeat of moves toward reopening economies plus gains in stocks eroded appetite for havens, with prices weakening toward $1,700 an ounce ahead of policy announcements from two of the world’s leading central banks.
The precious metal eased after U.S. equities hit the highest in almost seven weeks as states including Florida took steps toward easing restrictions. Italy, one of the countries hit hardest, prepared to begin reopening, although the World Health Organization warned the coronavirus pandemic is far from over.
While bullion is still near the highest in more than seven years amid the outbreak, investors are questioning if there’s scope for further gains given the restarts. At the same time, they’re tracking the stimulus by governments and central banks to aid growth, with the Federal Reserve and the European Central Bank to make policy announcements on Wednesday and Thursday.
While bullion saw some pressure from strength in stocks, “the demand destruction due to Covid-19 cannot be overstated, volatility in financial markets remains elevated and precious metals, especially gold, remain a good hedge,” said Avtar Sandu, senior manager for commodities at broker Phillip Futures Pte. Moreover, the rebound of activity may be pushed back, he said.
Spot gold fell as much as 0.8% to $1,700.30 an ounce and traded at $1,700.72 at 11:25 a.m. in Singapore. Prices — which rallied to $1,747.36 on April 14, the highest since 2012 — lost a combined 1% over Monday and Friday.
The drop in prices came after worldwide holdings in bullion-backed exchange-traded funds eased on Monday following 25 days’ of net inflows, according to data compiled by Bloomberg.
| For more coverage of central banks’ decisions this week: |
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In other precious metals, silver and platinum declined, while palladium advanced.
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