Gold slumped over 3% on Friday, en route to its biggest daily fall in nearly seven years as mounting coronavirus fears drove panic-stricken investors to liquidate assets across the board. The free fall hammered other precious metals as well, with palladium marking its worst performance since the 2008 financial crisis, down more than 10%, and silver sliding over 5%.
"People are trying to sell whatever they can. It's an overall sell-off," said Michael Matousek, head trader at US Global Investors. Spot gold plunged 3.5% to $1,584.84 per ounce as of 11:03 a.m. EST (1603 GMT), leading to the biggest one-day percentage decline since mid-2013. Bullion is down more than $60 from the session high of $1,649.11 touched earlier.
US gold futures declined 3.3% to $1,588.40 per ounce. The precious metal saw sharp price swings this week, having hit a seven-year high of $1,688.66 earlier this week. The metal is now on track to post its biggest weekly decline since early November.
The rapid rise in coronavirus raised fears of a pandemic, with six countries reporting their first cases and the World Health Organization warning it could spread worldwide. The virus panic sent world share markets on course for their worst weekly fall since 2008, with almost $6 trillion wiped from their market value so far this week.
"As sentiment has deteriorated, investors have closed some of their open positions in currencies, but most likely also in gold. Therefore, gold prices have failed to make new highs now that equity markets have aggressively sold off," ABN Amro analyst Georgette Boele wrote in a note. "If risk aversion were to result in a market panic, investors will find cash and very liquid assets attractive. They will probably liquidate gold investment positions."
In other precious metals, palladium dived 10.2% to $2,554.29 per ounce. "With palladium it is a similar phenomenon, where people need to sell to cover up their losses elsewhere," said Ryan Giannotto, Head of research at GraniteShares.
Palladium jumped to a record $2,875.50 on Thursday due to a sustained supply shortfall. The auto-catalyst metal was on track to gain for the seventh consecutive month. Platinum shed 4.4% to $859.10, facing its worst weekly fall since 2010. Silver fell 5.8% to $16.67 an ounce, on track for its worst week since April 2013.
"The gold/silver ratio has risen ... to 95, meaning that silver is lower vis-à-vis gold than at any time in almost 30 years," Commerzbank analysts wrote in a note.
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