Metals Stocks: Gold futures gain modestly as global stocks and oil get routed

Gold for April delivery GCJ20, -0.03% on Comex gained $11.70, or 0.7%, at $1,684.10 an ounce, after bullion put in a 6.79% gain last week, representing its largest weekly rise for a most-active contract since 2011, according to FactSet data.

May silver SIK20, -2.85%, meanwhile, was off 43 cents, or 2.5%, at $16.830 an ounce, after booking a 4.89% gain based on the most-active contract.

Global markets were in turmoil which have reached a fresh peak after Russia and the Organization of the Petroleum Exporting Countries failed to strike an agreement on deeper crude production cuts. In response, Saudi Arabia slashed crude prices and was looking to ramp up production, a move that is intended to cement its market share, leading investors to worry about a price war that could send shock waves through markets.

See: Oil plunges 25% and investors brace for a race to the bottom, as an all-out OPEC ‘price war’ erupts between Saudi Arabia and Russia

The problems around oil comes as infections of COVID-19 are growing and threatening to put a further dent in global supply chains and economies already reeling from the epidemic that was first identified in December in Wuhan, China and has infected 111,284 cases, and claimed 3,900 lives.

Gold prices had been at an intraday peak at $1704.30 an ounce, but has pulled back since, leading some analysts to speculate that traders are readjusting their portfolios amid a market rout that may result in some margin calls.

“People and traders are selling gold to invest in crude oil and also meet margin calls on crude oil. Crude oil looks much more risk free at current price of $31.80 (nymex) than gold at $1676.00” wrote Chintan Karnani, chief market analyst at Insignia Consultants.

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