Metals Stocks: Gold Edges Lower, Pinned Down By Stronger Dollar And Forced Liquidation

Gold traded lower Thursday, continuing to betray its reputation as a haven, as a global equity rout triggers forced liquidation and a surge in the U.S. dollar.

Gold for April delivery GCJ20, -0.17% on Comex fell 0.2% to $1,475,40 an ounce, while May SIK20, +2.06% rose 2% to $12.05 an ounce.

U.S. stock-index futures pointed to a lower start for Wall Street after another rout on Wednesday that was accompanied by selling across asset classes, including traditional havens like U.S. Treasurys, and a continued surge in demand for the U.S. dollar. The ICE U.S. Dollar Index DXY, +0.76%, a measure of the greenback against a basket of six major rivals, rose 1% Thursday after hitting a three-year high a day earlier.

Read:How a ‘disorderly’ U.S. dollar is amplifying the stock-market rout and adding to volatility

“Investor panic on financial markets has resulted in a liquidation of open positions and a flight to the most liquid assets, such as U.S. Treasurys and cash in dollars and Japanese yen,” said Georgette Boele, precious metals analyst at ABN Amro, in a note.

Worries about physical demand as a result of a global slowdown are also a drag on gold, while a rise in the Cboe Volatility Index VIX, +4.06% to an all-time high and continued strength in the dollar set up a negative environment for the metal, she said.

‘We expect financial markets to remain in a risk off mode in the coming weeks and months, which should result in more dollar strength and gold price weakness,” she said.

RECENT NEWS

What Advisers Misunderstand About Protection

Protection is rarely rejected outright. More often, it is misunderstood. Most advisers recognise th... Read more

Gyrostat Market Outlook: Looking Beyond The 30-day Volatility Headlines

This outlook examines how financial markets are pricing risk rather than attempting to forecast market... Read more

Gyrostat Capital Management: The Hidden Assumption In Most Portfolios - Stability

Markets do not usually fail portfolios. Assumptions do. Most portfolios are built with car... Read more

Gyrostat February Outlook: Stewardship As Risk Reprices

This monthly outlook examines how financial markets are pricing risk, rather than attempting to forecast ... Read more

Gyrostat Capital Management: Why Risk Management Is Not About Predicting Risk

Why Risk Management is Not About Predicting Risk Financial markets reward confidence, but they punish certai... Read more

Gyrostat January Outlook: Calm At Multiyear Extremes

This monthly Gyrostat Risk-Managed Market Outlook does not attempt to forecast market direction. Its p... Read more