By Gina Lee
Gold prices in Asia fell on Wednesday as continued volatility due to the COVID-19 pandemic put investor risk sentiment on a roller coaster ride.
The International Monetary Fund said overnight that the COVID-19 pandemic could cause the global economy to shrink by 3% in 2020, the biggest collapse since the Great Depression.
Gold futures gained over 2% in the previous session, their highest level since 2012, as investors flocked to the yellow metal in the aftermath of the announcement. But they gave up these gains as they lost 0.93% at $1,752.5 by 9:41 PM ET (2:41 AM GMT) in the current session.
Gold pared earlier gains as “there’s a little bit of a move on volatility, and equities turned around a bit, and what we might be seeing is that people are locking in what they’ve gained on gold here,” Bart Melek, head of commodity strategy at TD Securities, told Bloomberg.
Asian stocks were mixed on Wednesday.
However, Bob Haberkorn, senior market strategist at RJO Futures, struck a positive note as he told CNBC, “There’s a lot of safe-haven buying. It’s the recession/depression concerns that are out there right now. The economic outlook looks pretty dire. The U.S. Fed just created $2 trillion last week and other central banks around the world are doing the same; interest rates are at or near zero, there’s a lot of concern out there and it’s just a perfect environment for gold to trade up north of $2,000.”
