Gold price dropped significantly on Tuesday (March 10). It continued to fall from a new high level, since December 2012, but the downtrend was fluctuated. The volatility was close to $40.
US President Trump said that “significant” measures will be taken to boost the economy, which is the main reason for the decline in gold price. In response to the impact of the new coronavirus pneumonia epidemic on the economy, it is basically expected that countries around the world will loosen their policies.
However, because the new coronavirus epidemic is still spreading rapidly, the stock market is highly volatile, and together with the factor “oil price war”, gold can still be a target for hedging.
The International Monetary Fund (IMF) said last week that the epidemic will reduce global output growth in 2020 to its lowest level since the financial crisis in 2008-2009, and investors and traders in the market are worried that the global economy will slow down for a long period of time.
Although the non-farm payrolls for February released by the United States last Friday beat the expectation, with 273,000 new jobs and the unemployment rate 3.5%, the market still expects the Fed will have a further rate cut after the March FOMC meeting. The Fed has already cut interest rate by 50 basis points in an emergency, which lowers the opportunity cost of holding gold with no yield, that benefits the gold price.
Investors believe that although non-farm payrolls remained strong in February, this report may not fully reflect the impact of the epidemic.