By Barani Krishnan
Investing.com - Gold is still a safe bet, for those need to cover margins on a tumbling Wall Street.
Investors in bullion as well as futures of the yellow metal dumped their holdings in the safe haven on Wednesday to cover margins for stock markets spooked by the global spread of the novel coronavirus.
Gold futures for April delivery on New York’s COMEX settled down $17.70, or almost 1%, at $1,641.40 per ounce. It was a second-straight day of losses for April gold after it jumped as much as 1.3% earlier in the day.
On Wall Street, the S&P 500 fell 5%, wading into bear-market territory and snapping a record decade-long bull run, amid fears that the spread of the coronavirus is far from over and its impact on the global economy could be worse than feared. Stocks also slumped as stimulus efforts to shield U.S. growth failed to assuage investors.
April gold briefly hit a 7-year high of $1,703.90 on Monday as turmoil across global markets from the crash in oil prices renewed the yellow metal’s charge higher after the last week’s rally of 7%.
“Gold is still in the early stages of a major bull run,” said Ed Moya of online trading platform OANDA. “In this battle of king of the safe-haven trade, gold will have an easier time to the $2,000 an ounce level than the 10-year Treasury yield will have falling to zero.”
“The dollar is about to become a funding currency and gold should see tremendous upside as long as the Fed does not deliver a policy mistake,” Moya said, adding that next week will be key for the yellow metal amid bets the Federal Reserve will cut rates again by a half point.