By Barani Krishnan
Investing.com - Just earlier this week, gold was chasing new $1,700 highs. Now, it is looking at $1,400 territory.
The wind got sucked out of gold again on Friday as massive liquidation by investors desperate for cash left the yellow metal with near-5% loss, deepening the rut after the previous session’s drop of 3%. For the week, gold lost more than 9%, its most in nearly nine years.
Fears of recession and the scheduled announcement of a national emergency for the United States by President Donald Trump to deal with coronavirus kept investors across markets wary on Friday, despite a rebound on Wall Street. The eagerness to turn anything worthy into cash made gold a prime target for liquidation.
“Global markets are now driven by investors moving to cash or T-bills as they are not looking to hedge, diversify or for a safe haven,” said Ole Hansen, head of commodity strategy at Saxobank, said in a tweet.
“The mentioned dash for cash hurting one of the few markets trading close to flat in the year. Crazy times indeed,” he said, referring to gold futures hovering at just around the 2019 settlement of $1,519.50.
Gold futures for April delivery on New York’s COMEX settled down $73.60, or 4.6%, at $1516.70 per ounce. For the week, the benchmark gold contract lost 9.3%, its most since the week ended Sept 18, 2011, when it fell 9.6%.
Spot gold, which tracks live trades in bullion, was down $58.19, or 3.7%, at $1,519.61 by 2:50 PM ET (18:50 GMT).
Just earlier this week, April gold hit seven-year highs of $1,703.90. With Friday’s intraday low of $1,504.35, most analysts agree that gold futures could enter $1,400 territory by the start of next week.
Gold was also weakened on Friday by a wave of stimulus measures by the central banks of China, Australia, Indonesia, Sweden and Norway in an attempt to put a floor beneath financial markets. In the U,S., the Federal Reserve announced a $1.5 trillion liquidity injection ahead of a full-point rate cut widely expected next week.