Gold rose on Friday as bargain hunters took advantage of the previous day's slide that exceeded 3.5%, but the precious metal was on track for its biggest weekly decline since November 2016. Palladium rose as much as 11.5%, a day after a 28% plunge, and was heading for its biggest weekly percentage decline ever.
Spot gold was up 0.2% at $1,580.24 per ounce by 10:23 a.m. EDT (1423 GMT). For the week, it was down about 5.8%. US gold futures fell 1% to $1,573.90. "Gold is regaining some ground because people are seeing yesterday's sell off as overdone, so there is basically bargain hunting considering risk related to coronavirus and its impact on global growth," said Julius Baer analyst Carsten Menke.
On Thursday, bullion posted its biggest daily percentage fall in nearly seven years, as panic-selling driven by coronavirus fears forced investors to cover margin calls in other assets. Wall Street was set for a strong rebound following the biggest daily selloff in more than three decades as investors hoped fiscal stimulus would head off a global recession.
In a move to stem a market meltdown, the Federal Reserve on Thursday offered $1.5 trillion in short-term loans, signalling more aggressive action to stimulate the economy.
"The expansion support measures from central banks, basically pumping money into the economy is one of the factors that is providing support for gold," Julius Baer's Menke added. On the physical side, major Asian hubs saw activity dwindle due to impact of the coronavirus outbreak, especially in the world's biggest gold consumer, China.
"We expect prices to remain supported by risk-off sentiment in the coming months as uncertainty surrounding global growth persists with the COVID-19 pandemic now spreading throughout the world," Fitch Solutions said in a note.
An oil price war will also support gold, Fitch added. Palladium fell 4.2% to $1,753.72 per ounce, and was headed for a weekly decline of more than 30%. "Palladium remains extremely volatile. The metal still has plenty of downside potential from a technical perspective.
In addition, there has been more and more negative fundamental news for palladium of late," Commerzbank analysts wrote in a note. Platinum gained 1.4% to $773.45, but was down nearly 15% for the week. Silver fell 2.4% to $15.45, the metal was on track for its biggest weekly decline since 2011.
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