Gold trims losses as safe-haven, central bank demand lend support

Gold dropped over 3% on Friday, after US President Donald Trump's bigger-than-expected tariff measures rippled across global markets, wiping out nearly $6 trillion in value from US stocks last week

Gold prices pared earlier losses on Monday, as some safe-haven demand filtered through and as strong central bank buying supported prices after they dropped to an over three-week low, while analysts continued to see a bullish outlook for bullion.

Spot gold was down 0.6 per cent at $3,019.63 an ounce, as of 0745 GMT.

Earlier in the session, gold dropped around 2 per cent to its lowest point since March 13, as jittery investors offloaded the precious metal to offset losses elsewhere, amid fears of a global recession, fuelled by an intensifying trade war.

US gold futures firmed 0.1 per cent to $3,037.30.

 

Gold dropped over 3 per cent on Friday, after US President Donald Trump's bigger-than-expected tariff measures rippled across global markets, wiping out nearly $6 trillion in value from US stocks last week and causing Japan's Nikkei share average to tumble nearly 9 per cent on Monday. [GOL/]

China retaliated with a slew of counter-measures including extra levies of 34 per cent on all US goods and export curbs on some rare earth metals.

"We've seen some forced selling coming through the market, a lot of liquidation to cover losses in other assets. The fundamentals are really good, but when you get this kind of panic taking hold, irrationality can take over and markets become much less efficient," Capital.com's financial market analyst Kyle Rodda said.

However, gold held above the $3,000/oz mark, as continued purchases from central banks, along with some safe-haven flows kept demand afloat.

China's central bank added gold to its reserves in March for the fifth straight month.

"Once the dust settles, the continued demand from central banks will act as a price stabilizing buffer that will give other investor types the confidence to buy gold as part of an overall reallocation of funds, and safe haven focus," said Ole Hansen, head of commodity strategy at Saxo Bank.

"Central banks are evidently still keen on adding gold to their reserves, which has been underpinning support for the precious metals," KCM Trade chief market analyst Tim Waterer said.

Spot silver gained 1.2 per cent to $29.92 an ounce, after marking its lowest level in nearly seven months.

Spot platinum fell 0.3 per cent to $914.35, palladium lost 0.7 per cent to $905.31.