(26 March 2020)DAILY MARKET BRIEF 2:Gold liquidity issues cause volatility as refineries close.

Gold rallied to $1637 per oz. The actual positive move in gold prices are backed by a shortage of physical gold in the markets as a result of ceased activity in gold refineries due to the Covid-19 outbreak. This situation causes liquidity issues in gold markets, which mostly explains the recent rise in price volatility and the gains despite an improved market sentiment.
In the foreign exchange, the euro extended gains to 1.0933 against a broadly softer US dollar. The pair is now preparing to test the 1.10 offers. Federal Reserve (Fed) ultra-loose policy stance versus the European Central Bank’s (ECB) neutral attitude towards interest rates should back a further recovery in the single currency. Stops are seen above the 1.10 mark and support the euro’s appreciation if cleared. Yet soft economic data is the highest barrier for the euro appreciation as activity in Europe slows at a historical rate.

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