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PRECIOUS-Gold rises as stimulus measures halt virus-led cash run

Published 21/03/2020, 04:45 am
© Reuters.
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(Updates prices)

* Gold, silver on track for second week of declines

* Platinum set to post worst week ever

* Dollar eases from three-year high

By Brijesh Patel

March 20 (Reuters) - Gold rebounded on Friday, rising as much as 3.1%, as a wave of fiscal and monetary stimulus by global central banks to counter the economic impact from coronavirus spread halted investors lure for cash.

Spot gold XAU= was up 0.7% at $1,480.53 per ounce at 01:34 a.m. EDT (1734 GMT). However, bullion has lost more than 3% so far this week.

U.S. gold futures GCcv1 settled 0.4% higher to $1,484.6.

"Finally gold starting to stabilize here. As we are seeing monetary stimulus hit the market and it is providing little bit of bounce not just in gold also in equities," said Edward Moya, a senior market analyst at broker OANDA.

"As we get beyond this initial risk-on day, we probably will start to see gold have a better outlook as the scramble for cash has exhausted and lot more investors remaining confident that it will maintain its safe-haven status."

Gold has lost more than $200 since surging past $1,700 per ounce last week, mainly due to hunt for cash and to meet margin calls.

Stock markets around the world rose after posting huge losses over the course of the week as measures from central banks boosted investor sentiment. MKTS/GLOB

Market participants are counting on further policy easing in the next few days as the U.S. Senate mulls a $1 trillion package that would include direct financial help for Americans.

Several other countries also rolled out measures to stem the economic damage, while the Bank of England cut its key interest rate. helping gold, the dollar index .DXY fell 0.4% after hitting a more than three-year high. USD/

"The surprising direct correlation between stock markets and the bullion price is continuing and is being helped by the greenback slowing down after yesterday's record," ActivTrades chief analyst Carlo Alberto De Casa said in a note.

"The (gold) price now faces the first key static resistance, which is placed at $1,520. A climb above this level would create space for further rallies."

Elsewhere, palladium XPD= was little changed at $1,652.84 per ounce.

"While the Covid-19 outbreak has so far been relatively muted in South Africa, developments there are worth following," Bank of America (NYSE:BAC) analysts wrote in a note.

"Shuttering operations there would potentially impact 75% and 40% of global platinum and palladium output respectively. All of these disruptions could reduce the supply overhang somewhat."

Platinum XPT= rose 4% to $610.03, but was on track for its biggest ever weekly fall.

Silver XAG= gained 2.2% to $12.37, but was heading for second straight week of losses.

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