The price of gold fell again in this morning's trade in line with the strengthening of USD and the yield of US government bonds to the plans of various countries to resume economic activity. Tuesday (4/28/2020), the price of gold in the spot market is priced at US $1,701.87/troy ounce.
The price of gold fell by 0.71%. In the last two days, the price of gold has tended to be corrected after touching its highest level in 7.5 years at US $1,731.33 / troy ounce on April 23. The gold price fell was triggered by several number of burdensome sentiments.
This morning the US dollar strengthened. This is reflected in the rise in the dollar index that measures the position of the dollar in the presence of six other currencies. Gold is a precious metal that is traded in US dollars.
If the USD strengthens, the price of gold that has risen significantly becomes more expensive for holders of other currencies. On the other hand, the price of gold also dropped when the yield of US government debt showed an increase.
The Gold Prices Fell As The Global Economy Continues
Since Friday, the yield of 10-year US government bonds has tended to rise. This is also a burdensome factor for gold. The plans of various countries to begin to revoke the lockdown and turn the wheels of the economy back into another sentiment that’s prevented gold prices from creeping up.
Some areas in several countries including the United States began to open their economies from "lockdown" because of coronavirus. Some of the world's major central banks will hold a meeting this week, with the Bank of Japan starting to ease monetary policy further.
Some European countries that have reported decreases in the number of cases have begun to relax restrictions. Italian Prime Minister Giuseppe Conte said that lockdowns in the country would be relaxed from May 4 and France would present a strategy of lifting restrictions on Tuesday.
Another positive sentiment came from the United Kingdom which reported an increase in the lowest daily mortality rate since March. And also New York recorded only 337 deaths or fell sharply from the highest level experienced daily earlier this month.
In Norway, elementary schools have re-opened especially for grades 1-4 after being closed since mid-March. Some small businesses have also been allowed to open. In Germany, small stalls and schools have also begun to reopen. Similar steps have also been followed by other European countries such as Spain and Croatia.
Market Remain Cautious and Monitor The Economic Movements
Market participants look forward to the monetary policy meeting of the US Federal Reserve and the ECB this week when a number of countries continue to take steps to relax the lockdown. New York Governor Andrew Cuomo said the economy of the state he leads could be reopened in mid-May.
The lockdown’s revoked as the momentum for economic recovery. But the big risk’s still waiting so the price of precious metals in gold is not too deep. Moreover, the various stimuli offered by the government and central bank make gold an attractive instrument during this pandemic era.
But some analysts still assume that the influence of this pandemic will continue. "Our world will still be far from a normal situation, even when there’s no lockdown. The greater risk then is economic collapse," Commerzbank analysts wrote in a note.
"Governments around the world are likely to continue to spend enormous amounts of money to overcome this situation. Most of them will be made by the central bank. Gold will remain in demand as a currency of crisis as nowadays. It’s reflected in the flow of funds into ETFs."
Investors are still closely watching the steps of the global central bank to save the economy from falling. Currently, investors are focused on the Fed meeting which ends this Wednesday and is followed by a meeting of the European Central Bank (ECB) on Thursday.
