Just when we thought that Gold is the safest haven amidst the market crash that’s happening due to Coronavirus, the former extended its dip and has recorded almost 2% loss after the previous day’s weakened session. Interpreting the global crises to end up with funding and liquidity problems, the investors are selling their assets to readily keep cash in hand, ramping the selling pressure.
The equities have collapsed to fresh lows as Coronavirus makes its significance felt on the all the indices of the Wall Street. Gold rate fall is just the continuing trend of the recession that is felt worldwide, loosing hands over the floatation of money as the sectors breakdown.
Gold started dropping from the start of the week on Monday, March 16, when it recorded a dip of 5.1% to $1,487.36 per ounce, marking the lowest since November 2019.
The fact that #gold is barely up shows how clueless everyone remains. They think because QE and ZIRP worked last time they will work again. They only "worked" because everyone thought the policy was temporary. When they finally realize its permanent, gold will go ballistic!
— Peter Schiff (@PeterSchiff) March 16, 2020
As the global crises dig deeper, the major investment avenues have been trading under pressure due to being unpredictable about what will happen next. The Fed rate cut on Sunday, March 15 did not give any sigh of relief as the markets kept melting at the onset of the week. However, the QE and ZIRP seem to do no good, as slashing the interest rate will not keep the debt in hand away. Gold had to be the last option to face the blow, however, seems like the last has come as the investors are not aware as to what will happen next and how ill can be the consequences. Therefore, exiting the investment before getting nothing towards something is the only approach.
Analyzing the 2-year chart of Gold against the US Dollar, we see that the current price fall after the 2018 dip has been one of the sharpest within the said time frame. The red candlestick reversal shows the building selling pressure after it recorded the highest of 2 years at $1,702.45. It has breached 5-month support as it tests the lows of November 2019.
As we see the global crises ramping up, we believe that the prices are likely to fall even further before it takes off totally bullish.