Gold Prices Flare Up Because of the US Stimulus Package to Fight Corona Virus
Gold prices fluctuated in trading Wednesday (Thursday Jakarta time). Its because the market responded to the US government’s stimulus package of USD 2 trillion to soften the economic damage from the coronavirus outbreak.
Quoted from CNBC, Thursday (3/26/2020), the price of gold in the spot market rose 0.1 percent to USD 1,611.73 per ounce. This price previously fell 1 percent after recording a 1 percent increase.
The price of US gold futures fell 1.6 percent to USD 1,633.20, while world stocks rebounded due to expectations of an approved US $ 2 trillion fiscal stimulus package.
“The risk of a big downturn (in gold) remains the potential for a sharp sell-off in the equity markets, especially after yesterday’s big rally,” said OANDA analyst Craig Erlam.
US Senate Majority Leader Mitch McConnell said the US stimulus package had been agreed, and a vote would be held on Wednesday.
“We still see a favorable background for gold because the economic downturn from the crisis due to the coronavirus must strengthen haven demand,” said Julius Baer analyst Carsten Menke.
Ownership in exchange-traded funds backed by the world’s most significant gold, SPDR Gold Trust, rose 1.3 percent on Tuesday.
The price of gold in the spot market is traded below US gold futures as a sign that the market is concerned that air travel restrictions and refinery closures will prevent the delivery of gold bars to the United States to meet contract requirements.
Among other metals, palladium rose 3.9 percent to USD 2,007.33 per ounce. While platinum rose 0.5 percent to USD 711.83, both rose more than 10 percent in the previous session after being locked up in a major South African producer.
Silver fell 0.4 percent to USD 14.22 per ounce.