Gold prices rebounded from a near two-week low hit earlier on Tuesday, after a sell-off in stock markets prompted investors to seek refuge in the safe haven metal.
Spot gold rose 0.4% to $1,936.87 per ounce after falling as much as 1.2% to $1,906.24. U.S. gold futures settled up 0.5% at $1,943.20.
“We saw a bounce off the lows in gold after a sharp drop in U.S. equities sparked some safe haven buying. People are confused, they don’t know where the bottom is at in the equity markets right now,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
Global equity markets and oil prices tumbled after a sharp sell-off in technology stocks, Brexit uncertainty and on concerns over flare-ups in coronavirus cases.
Gold’s gains came despite a stronger dollar, which rose 0.7% against rivals.
Investors are now awaiting an ECB policy meeting due on Thursday, while the U.S. Federal Reserve’s next meeting is scheduled for next week.
“All the central banks are in the same boat. They will have to keep printing money, keep easing policy, in order to fight the slump we are in” and that will keep gold supported, said Edward Meir, an analyst at ED&F Man Capital Markets.
Bullion has risen over 27% so far this year, after central banks globally flooded markets with extraordinary stimulus to offset the economic damage inflicted by the coronavirus pandemic, as it is considered a hedge against inflation and currency debasement.
“Gold has been trapped in a really tight trading range. If we can break out over $1,960, it might rekindle some life back into bulls,” Streible said.
Elsewhere, silver fell 0.8% to $26.78 per ounce and platinum was up 0.5% to $903.33, while palladium dipped 0.6% to $2,280.97.