Gold climbs as investors sought safe-havens after an historic slump in oil prices aggravated fears of a coronavirus-linked global recession.
Oil prices fall sparks worries about further turmoil in the energy sector, already reeling from the heavy blow from global shutdowns. The dizzying dive in oil has turned investors to the safety.
Α wider market sell-off drove a scramble for cash and prompted investors to sell precious metals to cover losses. Gold prices are expected to firm in the coming days.
Congress has reached a deal on a fourth coronavirus spending bill. The $480 billion package contains $310 billion in additional funds for the Paycheck Protection Program. This fund provides loans for businesses affected by coronavirus lockdowns and relief for the hospitals hammered by the pandemic.
The bullion tends to benefit from widespread stimulus measures from central banks. Traders often see it as a hedge against inflation and currency debasement.
Spot gold was up 0.6% at $1,695.05 per ounce at 1203 GMT, after touching a near two-week low on Tuesday. U.S. gold futures jumped 1.7% to $1,715.80.
Governors of about half a dozen U.S. states pushed ahead on Tuesday with plans to partially reopen for business.
START TRADINGForex – Gold climbs amid oil slump
In the currency market, the dollar was broadly supported as investors fled riskier assets for the world’s most liquid currency. Investors remain cautious about a swift recovery as more companies issued worrying financial forecasts.
The dollar was down 0.2% against a basket of comparable currencies but still up around 0.4% on the week.
The Japanese yen maintained its gains from the past week versus the dollar, up around 0.1%.
The Swiss franc stood near five-year high against the euro at 1.05255 franc.
Oil-driven economies suffered. The Canadian dollar was less affected, up around 0.5% versus the dollar and looking set to erase all of Tuesday’s losses.
The Australian dollar was up 0.8% after a record surge in retail sales last month, spurred by panic buying.
The euro remained range-bound before an EU meeting tomorrow to discuss financial aid in the euro zone. It was last at $1.08710.
Sterling traded slightly higher. Some traders bought back into a currency that had slipped to a two-week low the day before.
The British currency was last up 0.3% both against the dollar and the euro, trading at $1.2333 and at 88 pence respectively. The pound had fallen the day before to $1.2248, a 13-day low. A month before that, it went to as low at $1.1413, its weakest in decades.
Oil prices fell again in overnight trading on Wednesday, with Brent dropping to its lowest since 1999.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money