Gold News & Info

Source:Bill Musgrave, American Gold Exchange

AustinGold jumped 1.8% to close near $1,595 on expectations that major central banks will provide monetary stimulus to offset economic damage from the coronavirus epidemic.

With COVID-19 now confirmed in 58 countries, and with deaths exceeding 3,000, the Organization for Economic Cooperation and Development (OECD) is forecasting global GDP could fall by 1% this year because of travel restrictions, closed factories, and paralyzed supply chains.

The Paris-based organization has called on governments to act "swiftly and forcefully" to cushion the blow to the global economy by adding liquidity to financial markets.

Bank of Japan President Haruhiko Kuroda said today the BOJ will bolster liquidity through additional quantitative easing and short-term lending operations. Fed Chair Jerome Powell, in a rare unscheduled statement on Friday, promised the US central bank will take action to relieve expected shocks from the epidemic.

As if on cue, the ISM reported US manufacturing fell in February to barely escape contraction as the coronavirus prevented factories from obtaining parts. Employment in the beleaguered sector, already damaged by trade wars, was negative for the seventh straight month. Meanwhile, China's factory and non-factory activity plummeted to all-time lows, according to official PMIs.

Shaking off the weak data, equities rebounded on the expectation of fresh monetary stimulus, with the Dow adding 5% while S&P 500 and Nasdaq both picked up 4.5%. Last week, all three main US indexes fell into technical correction, meaning drops of 10% or more from their recent peaks.

Capping Wall Street's worst week since the financial crisis in 2008, Friday's huge losses in equities forced hedge funds and other large speculators to scramble for cash to cover margin calls as February's books were closed. Gold was an easy victim, being one of the most liquid assets. Today that technical pressure disappeared, allowing the metal to rebound toward resistance at $1,600.

The dollar lost 0.8% against major rivals, also on speculation that the Fed will slash interest rates this month. CMA FedWatch places to odds of a half-point cut at 100% at the next meeting, up from zero one week ago.

Lower rates pressure the dollar by making it less attractive to currency investors seeking higher yield. A weaker buck, in turn, supports gold and other commodities by making them less expensive in other currencies, lifting demand overseas.

Oil also rallied strongly on stimulus hopes, with WTI crude rising 4.1%. Gold often trades in sympathy with oil as a hedge against energy-related inflation.

The other precious metals were mixed, with silver climbing 1.7% while platinum and palladium fell 0.6% and 2.6%, respectively.

At the Comex close: April gold jumped $28.10 to $1,594.80; May silver climbed 28 cents to $16.74; April platinum slid $5.30 to $859.40; and June palladium dropped $63.40 to $2,427.70 an ounce.