LAUNCESTON, Australia, March 23 (Reuters) – Is gold’s current pullback just a blip on the way to higher prices as fears over the economic impact of the coronavirus will drive renewed buying, or is it a sign the precious metal isn’t quite the safe haven it used to be?
Certainly, up until two weeks ago gold was behaving pretty much as expected during times of global economic uncertainty, with spot prices reaching as high as $1,702.56 an ounce on March 9, a jump of 13% from the end of last year.
However, the rally reversed course since then, with the yellow metal dropping 14.8% to a low of $1,450.98 an ounce on March 16. It has since steadied and was around $1,495.60 an ounce in early Asian trade on Monday.
Much of the blame for gold’s recent stumble has been laid at the door of investors dashing to cash, either to meet margin calls as equities and other investments sink, or on the perception that cash is king.
Certainly, the decline in the amount of gold held by the SPDR Trust bears this view out, with the total falling to 29.2 million ounces on March 20, down 5.8% from the 3-1/2 year high of 30.99 million on March 9.