Gold’s pandemic-related rout topped $250 an ounce on Monday, it’s seventh straight down day, as panic continued to grip global financial and commodity markets.
Gold for delivery in April dropped as low $1,450 an ounce on the Comex market in New York on Monday, down $65 an ounce, or 4.3% from Friday’s closing price. Last Monday, the metal hit a seven-year high of $1,704.30.
Contracts representing 53 million ounces of gold had exchanged hands by by mid-afternoon, with gold clawing its way back above $1,500 and near the break even level for 2020.
“The markets are in panic mode,” Alexander Zumpfe, a trader at Heraeus Metals Germany, said in an email to Bloomberg:
“The interest rate cut by the US Federal Reserve has not changed this — on the contrary.”
Gold “is being sold to generate liquidity and to offset losses in other markets,” Zumpfe said.
“In some cases, investors also sell their gold holdings in order to keep the value of the precious metal constant in their overall portfolio. Due to the lower value of the equity share, gold would otherwise take up a larger share in terms of value.”