Gold set for biggest weekly drop in nearly 7 years in coronavirus-led sell-off

London (Mar 13)  Gold prices fell further on Friday and were on track to post their biggest weekly drop in nearly seven years, as a rout in global equities forced investors to cover margin calls.

FUNDAMENTALS

Spot gold was down 0.9 per cent to $1,562.30 an ounce by 0139 GMT, after a more than 3 per cent sell-off in the previous session.

For the week, it was down about 6.7 per cent - the biggest since June 2013.

US gold futures fell 1.7 per cent to $1,563.10.

A significant sell-off in equities would place further pressure on gold as investors would liquidate positions to meet margin calls, ANZ analyst Daniel Hynes said.

"However, the market is relatively long and there are no signs of investors getting bearish," he said.

Asia's stock markets were hammered as panic gripping world financial markets deepened and even safe-haven assets were ditched to cover losses in the wipeout.

The International Monetary Fund on Thursday urged countries to work together in responding to the rapidly spreading outbreak, and called for more donations to help the poorest countries deal with the escalating pandemic.

The European Central Bank approved fresh stimulus measures to help the euro zone economy cope with the growing cost of the epidemic, but kept interest rates unchanged.

US House of Representatives Speaker Nancy Pelosi told reporters that lawmakers and the White House had neared agreement on a legislative response to the outbreak and said she hoped to make an announcement on Friday.

The Federal Reserve moved to stem a market meltdown on Thursday with offers of $1.5 trillion in short-term loans that some analysts say could point to more aggressive action from the central bank in coming days to stimulate the economy.

Airlines appealed for urgent government financial support as US carriers rushed to cut flights to Europe in the wake of new US travel restrictions.

Palladium rose 1.4 per cent to $1,856.88 per ounce, having fallen about 20 per cent in the previous session, while platinum gained 0.1 per cent to $763.72. Both the metals were, however, headed for their biggest weekly decline on record.

Silver fell 2.4 per cent to $15.44 per ounce.

ETmarkets

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