Gold prices ended lower on Tuesday, giving back a big chunk of the previous session’s haven-inspired gains in a bout of apparent profit-taking.
“Let’s see how well gold is supported on pullbacks now—my suspicion is that it will find strong buying interesting and price support on pullbacks that…will be short-lived,” Peter Spina, president and chief executive officer of GoldSeek.com, told MarketWatch.
“Buybacks remain buying opportunities. Silver especially,” he said. “Not sure if investors have the opportunity to accumulate below $18 anymore.”
Gold for April delivery /zigman2/quotes/210036054/delayed GCJ20 +0.52% on Comex fell $26.60, or 1.6%, to settle at $1,650 an ounce, while March silver dropped 68.5 cents, or 3.6%, to $18.191 an ounce.
“Too many people think that gold is rising just because of the corona virus,” said Spina. “It is just adding some fuel to its rise. The key drivers are the collapsing real yields, globally.”
“Gold’s short-term ability to move past $1,700 and challenge $1,800-$1,900 in the coming few months, is certainly a growing probability with this price breakout above $1,600,” he said. “But step back and look at the key drivers moving gold over the past year and those are growing in its favorability, which easily puts the gold price in striking of record highs this year.”
“While economic growth concerns surrounding the coronavirus were the most recent impetus supporting gold prices, there is very little reason for gold prices to move significantly lower given the current global environment,” said Jeff Klearman, portfolio manager at GraniteShares, which offers the GraniteShares Gold Trust /zigman2/quotes/208448147/composite BAR +0.56% .
U.S. Treasury yields fell Tuesday with the 10-year Treasury note yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +0.27% carving out a new all-time low at 1.322%. U.S. benchmark stock indexes traded lower, extending declines from Monday when the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.69% and the S&P 500 /zigman2/quotes/210599714/realtime SPX -1.51% fell more than 3% for their biggest one-day percentage decline in two years.
Overall, gold has done well against a backdrop of declines in Treasury yields and the U.S. stock market, but at least one analyst warned that gold may eventually suffer on the back of those declines.
“Backing gold has paid handsomely so far in 2020...but if coronavirus really does start to suck oxygen out of the markets day after day, this is where it gets tough to sit tight in gold as longer-term hedge, because hedge funds facing margin calls on other trades will liquidate what’s winning too,” Adrian Ash, director of research at BullionVault, told MarketWatch.
For anow, pressure on gold appeared to stem from profit-taking on recent gains, with the most recent Commodity Futures Trading Commission data showing a record high in net long speculative gold positions, noted Ipek Ozkardeskaya, analyst at Swissquote.
In other metals trade, March copper edged up by 0.04% at $2.578 a pound.
March palladium rose 5% to a fresh record high at $2,647.80 an ounce, while April platinum /zigman2/quotes/210262726/delayed PLJ20 -0.55% dropped 4.3% to $932.30 an ounce.