Gold futures settled near 3-month lows on Monday as traders squared up long positions to raise funds for margin requirements and other essential needs after riskier assets such as equities tumbled amid rising worries about the impact of the coronavirus outbreak.
The yellow metal lost ground even as the dollar weakened after the Federal Reserve cut interest rates by 100 basis points on Sunday and
The dollar index, which dropped to a low of 97.45, later regained some ground, but was still down in negative territory at 98.16, trailing its previous close by about 0.6%.
Gold futures for April ended down $30.20, or about 2%, at $1,486.50 an ounce, the lowest settlement price since December 20, after hitting a low of $1,450.90 in the session.
Silver futures for May settled lower by $1.684, or almost 12%, at $12.816 an ounce, recording its lowest close in nearly 11 years. Silver contracts touched a low of $11.770 an ounce intraday.
Copper futures for May ended down $0.0715 at $2.3925 per pound.
On Sunday, the Federal Reserve cut interest rates to almost zero in another emergency move to shore up the world’s largest economy, as part of a coordinated action announced in the U.K., Japan, eurozone, Canada, and Switzerland.
The central bank said it expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.
In addition to cutting rates, the Fed also announced a new quantitative easing program, revealing plans to increase its holdings of Treasury and mortgage-backed securities by at least $700 billion.
The drastic moves by the Fed, a couple of days ahead of the two-day monetary policy meeting set to begin on Tuesday, have raised some concerns that central banks around the world will run out of ammunition to deal with a deepening crisis.
According to a report released by the Federal Reserve Bank of New York, the New York manufacturing activity unexpectedly contracted in the month of March. The report said the bank’s general business conditions index plunged to a negative 21.5 in March from a positive 12.9 in February, with a negative reading indicating a contraction in regional manufacturing activity.
Economists had expected the general business conditions index to show a much more modest decrease and remain positive at 4.0.
The material has been provided by InstaForex Company – www.instaforex.com