Precious Metals Record New Lows This Year Amid Virus Chaos

March 14, 2020

London (Mar 14)  The yellow metal's behavior this week has brought fear to investors, market panic and record sell-offs. Gold is historically a good performer during periods of such volatility. In the past five days this has not been the case - bullion has been one of the biggest losers in any asset class.

CME Group's advanced readings for Gold futures markets indicated that on Wednesday, this time around 29.2K contracts, traders scaled back their open interest positions once more. On the other hand, volume increased for the second consecutive day, this time by nearly 212K contracts, the largest single day construct since February 28.

Elsewhere, Palladium dived more than 8 percent, a day after a 28 percent retreat, and headed for its biggest record-breaking weekly percentage decline. Spot gold was $1,517.38 an ounce, down 3.8 percent. It has been down more than 9 percent for the week. The U.S. gold futures shed $1,516.61 at 4.5 percent.

The record-breaking fall in the S&P 500 on Thursday would have been a trigger for a good gold series. The reverse proved true as a mass exodus to cash led to a near-$75 plunge in April gold futures. Today "poor" is transforming for bullion to "worse." Prices are again going down high, making new 2020 lows just above the handle of $1500.

So far this week the ounce troy of precious metal is still under strong selling pressure. The sharp pullback on Thursday came in the midst of the firm's downtrend in open interest, which would at least reduce the downside risk in the very near future. However, the large volume upturn tends to support a deeper decline.

Bullion has shed over $180 since last week and it reached more than a seven-year peak of $1,702.56 an ounce, as market players around the globe used the safe haven yellow metal to fulfill marginal calls.

The markets have trimmed risk exposure on Fridays since the COVID-19 crisis started several weeks ago. So far today, many traders and investors seem to be seeking to find a bottom from the U.S. stock collapse ahead of the weekend break. Though risk assets are receiving a boost today, sentiment still remains negative due to coronavirus. The new competitive market leads to gold bidding and holding companies over $1500.0.


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