By Barani Krishnan
Investing.com - Gold prices drifted on Wednesday, seeking a steady perch for its next trajectory, as President Donald Trump’s warning of a “very painful” time for the United States from the coronavirus and a fresh selloff on Wall Street sent mixed signals to investors.
Gold futures on New York’s COMEX settled down $5.20, or 0.3%, at $1,591.40.
Spot gold, which tracks live trades in bullion, was up $11.52, or 0.7%, at $1,589.05 by 2:53 PM ET (18:53 GMT).
Notwithstanding Wednesday’s mixed trends, gold is still in a bullish mode, finishing with a sixth-straight quarterly gain as both futures and bullion finished March up 5%.
Gold is the go-to asset in times of social, political or financial trouble. America’s struggle with Covid-19 should ideally boost the yellow metal as a safe haven. Yet, any slump in U.S. stocks might intensify the cash crunch experienced by many investors now, prompting them to sell their gold holdings to cover losses in equities and elsewhere.
Gold is also at a crossroads after news earlier this week that Russia’s central bank, one of the biggest hoarders of bullion, was stopping its purchase of gold bars, presumably because of weaker finances caused by a crash in prices of oil, a commodity integral to Moscow’s economy.
“Gold prices should rise as the virus spread is intensifying alongside lockdown efforts to mitigate it,” said Ed Moya, analyst at online trading platform OANDA. “Gold prices should be supported as the impending global recession that is upon markets will be deeper and longer.”
“The path higher for gold, however, will be bumpy as steady central bank selling will likely occur as governments become desperate for raising cash.”