By Geoffrey Smith
Investing.com -- Gold prices fell back below $1,700 an ounce on Tuesday as the shock of seeing oil trade below zero for the first time on Monday triggered fresh caution in global markets.
U.S. Treasury bonds were the haven of choice, the yield on the 10-year benchmark note falling to its lowest in six weeks at 0.55%. The 30-year yield fell 10 basis points to 1.14%, also a six-week low.
By 11:50 AM ET (1550 GMT), gold futures for delivery on the Comex exchange were down 1% at $1,694.80 a troy ounce, while spot gold was down 1% at $1,678.74.
Silver futures were down 4.7% at $14.87 an ounce, while platinum futures were down 6.2% at $746.70 after the oil crash and reports about slumping used car prices damped hopes for a quick recovery in auto sector demand.
Flow data continue to suggest, however, that this is likely to be a temporary setback for the yellow metal. Bloomberg reported earlier Tuesday’s that State Street’s SPDR Gold Shares (NYSE:GLD) ETF is on pace for its best month of inflows since 2016, with $4.3 billion collected so far. At the same time, BlackRock’s iShares Gold Trust (NYSE:IAU) has taken in almost $1.3 billion in April, its best month on record, with eight trading days still to go.
Total ETF gold holdings have risen by a whopping 94.5 million ounces so far this year, according to Bloomberg, an increase of 14% since Jan. 1. Tuesday marked the 21st consecutive day of inflows.
Recommendations from Wall Street also continue to pour in. Analysts at Bank of America (NYSE:BAC) raised their gold forecast on an 18-month view to $3,000, citing the massive financial repression implicit in the fiscal and monetary programs of the developed world in the face of the Covid-19 pandemic.
“As economic output contracts sharply, fiscal outlays surge, and central bank balance sheets double, fiat currencies could come under pressure,” BofA analysts led by Michael Widmer wrote in a note to clients. “Financial repression is back on an extraordinary scale.”
Widmer and team expect gold to average $1,695 an ounce this year, rising to $2,063 in 2021. That’s an intriguing contrast with analysts at JPMorgan (NYSE:JPM), who expect it to peak in the second half of this year before an economic rebound teases gold back into other asset classes.