High Uncertainty in Markets Drives Gold Weaker as Traders Seek Liquidity

High Uncertainty in Markets Drives Gold Weaker as Traders Seek Liquidity

Posted Thursday, March 26, 2020 by
Arslan Butt • 1 min read

The safe haven asset gold is trading weaker early on Thursday as investors focused on raising liquidity even as the US government gets ready to announce its fiscal stimulus package to offset some weakness in the economy. At the time of writing, GOLD is trading at a little above $1,605.

Markets continue to focus on the rising uncertainty being driven due to escalating concerns about the coronavirus pandemic and its economic fallout. The risks of a global economic recession are on the rise following the release of disappointing economic data in recent times.

Core durable goods orders in US witnessed an unexpected increse during February, but point to an impending reduction in business investment, which could fuel further strain in the economy. Meanwhile, several officials have cautioned that the global economy could experience a recession which would be more severe than the one seen during the 2008-09 financial crisis, further raising tensions in the market.

While gold is conventionally looked upon as a safe haven asset that traders turn to in times of uncertainty, the high volatility has driven investors to turn away from other instruments and towards the safety of cash, causing weakness in the yellow metal instead.

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