We've been here before. In 2008 Gold dropped before marching higher to record $1920/oz three years later.
Gold fell a fifth in 2008, on its way to a record high.
Gold's Swoon Echoes Financial Crisis Blip
The conditions are still there for an extended rally.
In times of coronavirus panic, even havens can be unreliable.
Gold closed off February on a tarnished note, ending last week with its steepest daily decline since 2013. As financial markets panicked over the spread of the pneumonia-like illness, stocks tumbled and dragged gold and other precious metals lower. That's a rare phenomenon for a metal that tends to shine brighter when everything else looks gloomy. It will also be a brief one.
Back in 2008, spot gold fell by more than a quarter between July and late October, before embarking on an unprecedented run toward $1,900 an ounce, once global rate cuts began in earnest.
This time too, preconditions are set for prices to keep rising. Already on Friday, Jerome Powell, chair of the U.S. Federal Reserve pledged to act as appropriate to soften the impact of the virus on the economy, paving the way for multiple interest rate cuts, perhaps even before mid-March. Expect a combination of rock-bottom yields, volatile markets and appetite from exchange-traded funds to keep gold's prospects bright.
It's been an impressive run for the yellow metal. It has added almost a quarter to its value from the start of 2019 to reach a seven-year high early last week, as investors sought protection from lofty valuations, an uncertain outlook and, eventually, falling stocks. Bullion has kept climbing just as fading confidence in the global economy drives down industrial metals like copper.
Read the rest of the story here: https://www.bloomberg.com/opinion/articles/2020-03-02/gold-s-slump-is-unlikely-to-signal-end-of-rally?sref=VxHCy32x
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