Gold and silver just achieved its highest ratio as the yellow metal slid more than 1% to its lowest price in a week. Recent price rallies motivated investors to take profits, but the metal is still on track to trade higher for the third consecutive month amid coronavirus worries.
Spot gold went down 1% to $1,623.51 per ounce following a 1.3% surge in the previous session. US gold futures slid 1.1% to $1,625 per ounce.
The Fed-sensitive 2-year Treasury yield crashed to 0.91% today against 1.38 a week earlier. Meanwhile, the 10-year Treasury yield fell to a record low of 1.15%.
Each yield reflects expectations on whether the Fed will choose to cut interest rates by three times or more over the course of a few years. Economists believe the economic effect of the virus is nothing more than a supply shock. That is something central banks don’t usually react to.
Bank of China International analyst Xiao Fu said she wasn’t surprised of corrections from time to time, especially at a time of continuous build-ups.
The precious metal climbed as far as 2% this month. Which hit a 7-year high at $1,688.66 with fears of the coronavirus. Investors are cashing in on three cuts from the Federal Reserve by the end of this year. That was one cut above earlier expectations.
An increasing number of cuts could lead to more support for gold prices, according to Fu.
Four more countries outside China reported their first coronavirus cases to account for about three-quarters of new infections.
The virus sent share markets plunging to compound its worst week since the 2008 global financial crisis.
While investors would expect robust demand for the metal in market scares due to the epidemic, the opposite happened this morning, according to Commerzbank analysts. Forced selling might have offset losses elsewhere.