Another round of apparent forced selling took a toll on gold Monday, with the yellow metal falling despite its usual safe-haven role, as U.S. stock-index futures fall their daily limit as investors failed to find reassurance in the Federal Reserve’s emergency policy easing.
Gold for April delivery GCJ20, -3.01% on Comex fell $43.70, or 3%, to $1,470 an ounce, while silver tumbled $2.48, or 17%, to $12.02 an ounce.
Gold rallied late Sunday after the Fed, in a surprise Sunday night decision, slashed its benchmark interest rate nearly to zero and implemented a bond-buying program, known as quantitative easing, of at least $700 billion. But gains soon gave way to losses as equities failed to find support in the wake of the move, slumping their daily 5% limit and pointing to deep losses for equity markets when trading begins Monday morning.
While looser monetary policy and pressure on assets perceived as risky, like stocks, would both normally be seen as a positive for gold, the metal has seen weakness in recent sessions on apparent forced liquidation that has seen leveraged investors dump positions en masse.
“Despite the huge liquidity that the Federal Reserve is splashing into markets, bullion seems to be unable to recover, at least for the time being, after last week’s sell off. We are in a scenario where investors are selling whatever they can and this has also affected gold, probably more than it should be,” said Carlo Alberto De Casa, chief analyst at ActivTrades, in a note.