By Barani Krishnan
Investing.com - It’s probably going to continue rallying in the near term, but gold decided that Wednesday was Dow day.
Investors cashed out the yellow metal a day after chasing it to just a whisker shy of $1,700 an ounce on Tuesday in a preliminary run-up to the $2 trillion coronavirus stimulus package agreed between the White House and Congress.
“Gold got beat today as investors scramble back into global equities,” said Ed Moya, analyst at online trading platform OANDA. “Europe had the best two-day rise since 2008, while the Dow Jones Industrial Average seems poised for a whopping 15% back-to-back gain, the first time it was able to do that during the coronavirus crisis.”
“Gold will ultimately benefit from all this stimulus and the softer dollar, but today it is all about stocks.”
Gold futures for April delivery on New York’s COMEX settled down $27.40, or 1.6%, at $1,633.40.
In Tuesday’s post-settlement trade, April gold raced to as high as $1,699.15 after settling up $93.20 at $1,660.80 per ounce. On the previous day, it rose about $83, accounting for a back-to-back rally of more than 11% over just two days.
Spot gold, which tracks live trades in bullion, was down $1.52, or 0.1%, at $1,615.23 by 3:36 PM ET (19:36 GMT).
The rebound in gold has come less than two weeks after it hit four-month lows of $1,450.90 on March 16.
“The surge in gold prices to start this week has been spectacular (with) the Fed's massive QE program and other facilities, which expanded assets that can be purchased to corporate bonds and flooded the market with liquidity, helping quench the markets dash-for-cash, in combination with the Fiscal stimulus package valued at nearly $2 trillion,” TD Securities said in a note.
“CTAs which were quickly whipsawed are buying the yellow metal once again, which likely helped trigger outsized moves amid lower liquidity.”