Gold slipped below US$1,600 after the Trump administration banned flights from Europe in an effort to curb the spread of COVID-19.
The price of gold slipped below US$1,600 an ounce on Thursday morning (March 12) for the first time since mid-February. The drop came after US President Donald Trump’s announcement that the US will implement a travel ban this week on flights from Europe in an effort to curb the spread of the coronavirus that causes COVID-19.
Falling 3 percent from US$1,641 to US$1,577 by 11:30 a.m. EDT, the yellow metal marked its fourth straight day of losses since hitting a seven year high of US$1,700 on Sunday (March 8).
Attempts to limit the global spread of COVID-19 have fallen short, and the World Health Organization declared the virus a global pandemic on Wednesday (March 11).
To date, there have been 4,751 deaths attributed to COVID-19, and more than 100,000 people have contracted the illness. Thankfully, 68,672 people have recovered from it.
The Trump administration’s travel ban will go into effect on Friday (March 13) at midnight and will last 30 days. The flight restrictions apply to 26 countries in the Schengen Area, a region with little border security that includes Italy, Germany, France, Spain and 22 other neighboring nations; it does not include the UK.
The decision to restrict most travel originating from Europe sent the markets into a tailspin, with US stocks sliding into bear market territory. The S&P 500 (INDEXSP:.INX) opened 7 percent lower, weighed down by the uncertainty now infused into the global supply chain.
The drastic decrease prompted a temporary trading halt on Wall Street shortly after North American markets opened to allow investors a chance to regain their composure.
If the US market closes in bear market territory — 20 percent lower than its all-time high — it will mark the end to the longest bull market in American history, reversing gains made in recent years.
“It’s not just the fear of the economy going weak, but basically being on the brink of shutting down,” Dennis Dick, a proprietary trader at Bright Trading, told Reuters. “It’s mass selling across the board (and) we are pricing in a potential to go into another financial crisis.”
Calls for cash on the currency derivatives market have ballooned to the highest level in years, which may explain some of gold’s price decrease as investors look to liquidate the safe haven asset for dollars.
Palladium also experienced a massive value drop, falling 28 percent from the previous session to US$1,575 an ounce by 11:50 a.m. EDT. The decrease has left the autocatalyst metal on track for its fourth straight day of losses and its most significant one day decline.
By midday, gold had clawed back some its early losses to briefly climb above US$1,600. The currency metal then slipped back below US$1,590.
As of 3:05 p.m. EDT, gold was selling for US$1,577.87.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.