Gold drops as investors cash out, dollar surges

Spot gold was down 0.6% at $1,477.07 per ounce, while U.S. gold futures were up 0.2% at $1,479.80.

“Clearly gold’s safe-haven status has not been held up,” said David Meger, director of metals trading at High Ridge Futures, adding, “players are moving towards cash.” “Also, we have seen extremely strong move in the dollar over the course of the last several sessions. As we do see more  central banks around the world act in regards to coronavirus, we do see the dollar is the flight to safety.”

The dollar notched a fresh three-year high as demand stayed high despite the recent burst of liquidity injection operations undertaken by central banks around the world.

“The world marketplace has seen confirmation that the greenback is still king when times get really tough. The big grab for greenbacks is perpetuating dislocations in the financial markets,” Kitco Metals senior analyst Jim Wyckoff said in a note.

Investors shed riskier assets as another round of sweeping emergency action from policymakers failed to convince panic-stricken stock markets.

“With all the extra stimulus from governments and central banks out there, it’s been a wild ride in debt markets recently, further feeding the frenzy in precious metal markets,” OANDA analyst Craig Erlam said in a note.

The relentless spread of the virus, which has infected nearly 230,000 across the world, has triggered panic and sparked a wide sell-off in assets, including safe-haven bullion.

Official data out of the United States showed the number of Americans filing for unemployment benefits surged last week to their highest level since 2017 in the first indication of the outbreak’s toll on employment.

Meanwhile, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust , fell 0.7% on Wednesday.

Among other precious metals, palladium rose 4.5% to $1,659.87 per ounce after sliding over 5% earlier in the day, while platinum dropped 5.4% to $590.52, falling for the seventh straight session.

Platinum and palladium will likely remain turbulent in coming months after huge losses sparked by the spread of coronavirus, before starting a tentative recovery, analysts said.

Silver gained 0.8% higher to $12.07 an ounce, but hovered close to an 11-year low hit in the previous session.