Gold Prices on Course for Solid Weekly Gain Despite Pullback

Commodities & Futures
© Reuters.  © Reuters.

By Geoffrey Smith — Gold prices fell on Friday as the yellow metal again reverted to trading like a risk asset as the “everything rally” of the last two days came to an abrupt end.

The steady stream of news depicting a further spread of the Covid-19 virus brought caution back to financial markets on Friday, with the U.S. outstripping China in numbers of confirmed cases. The record leap in U.S. joblessness last week continued to support belief in a long period of low or negative interest rates on other safe assets. 

Shrill tweets from President Donald Trump demanding faster production of medical ventilators from the auto industry did little to calm nerves, and appeared to contradict Trump’s assertions to Fox News the night before that the number of ventilators needed wouldn’t be as high as others, including New York Governor Andrew Cuomo, suggest.

By 12:10 PM ET (1610 GMT), for delivery on the Comex exchange were down 1.6% at $ 1,625.60 a troy ounce, on course for a gain of some 9% for the week. was down 0.2% at $ 1,625.12, having largely closed the arbitrage that opened vis-à-vis the futures contract earlier in the week.

Haven assets, however, were well bid in general. Medium- and long-term U.S. government bond yields fell by between five and seven basis points, flattening the curve as shorter-dated yields edged higher. Bloomberg reported earlier that ETFs bought gold for a fourth straight day on Thursday, bringing net purchases so far this year to 6.15 million ounces.

European government bonds, meanwhile, also fell – although spreads between core and periphery names widened as the euro zone’s fight over common debt issuance grew increasingly heated. Portugal’s Prime Minister Antonio Costa accused Dutch finance minister Wopke Hoekstra of advancing “repugnant” arguments in rejecting jointly-guaranteed “coronabonds” at this week’s Eurogroup meeting, illustrating the tension felt by some of the bloc’s weaker members as they face huge increases in borrowing to deal with the costs of the crisis.

Elsewhere, fell 0.8% to $ 14.55 an ounce, but were still on course for a weekly gain of some 16%, while were up 0.2% at $ 738.90 an ounce, a weekly gain of 20%.

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