In this blog post, read a collection of Tweets from John Reade on gold.
In this webinar, our Chief Market Strategist, John Reade and Chief Investment Strategist at State Street Global Advisors, Michael Arone, discuss the global impact of COVID-19 and whether gold can help manage this unprecedented market volatility.
- The effect of government policies to control the pandemic on the global economy
- Impact of liquidations, fight-to-quality and monetary policy on gold
- Outlook for the remainder of 2020
In February, central banks bought a net 36 tonnes (t) of gold, almost a third higher than January’s net purchases, but 52% lower y-o-y. This brings y-t-d net purchases to 64.5t, 44% lower than the 116.1t of net purchases over the first two months of 2019.
Wishful thinking. That’s how Angel Gurría, secretary general of the Organisation for Economic Co-operation and Development (OECD), responded to any prospect of a swift economic recovery from the coronavirus pandemic. But the scale of the impact on the global economy – as well as our daily lives – has been matched by the scale of the financial response.
The domestic gold price increased by 4.1% in February m-o-m and 8.4% higher than the end of 2019. The rising gold price and higher volatility in the market lured investors towards gold ETFs.
The coronavirus (COVID-19) outbreak supported demand for gold as a safe-haven asset as stocks and commodities fell sharply. Physical gold demand faltered domestically due to COVID-19 and seasonality factors.
There is an aspect to gold’s role in our society which tends to receive much less attention: it is a critical component in many diagnostic test kits.
Heavy selling has been seen across all four precious metals this morning. Gold has dropped $50/oz and is now trading around $1477/oz.
The break of the 200 day moving average - at about $1500/oz - seems to have triggered stop-loss selling.
RSI now oversold FWIW. https://t.co/Db5oDuRYaS
This week, we launched our February 2020 ETF flows report, which highlights the positive impact current market volatility is having on investment flows in gold-backed ETFs.
The US Federal Reserve (Fed) announced an emergency 50bp rate cut yesterday, bringing the Fed funds rate down to a 1-1.25% range, in response to ongoing concerns about the potential impact of the coronavirus outbreak to the global economy. Treasury bond rates followed suit, with the 10-year note hovering 1% at the time of writing – an all-time historical low
The stock market embraced the weakest one-week performance since the financial crisis last week on the back of growing concerns of the continued spread of the coronavirus across the globe. Despite the risk off-moves, gold was lower by more than 3% last week, which is historically unusual during these types of movements. There are a few potential reasons for the weakness.
At the end of January, the new head of the European Central Bank (ECB), Christine Lagarde, announced the launch of a year-long strategic review of the bank’s monetary policy strategy. Stemming from this, there has been much discussion recently about the ECB’s existing “below but close to 2%” inflation target, and whether this needs to be made more specific, both in aim and measurement.