SINGAPORE – Not even the safe haven of gold has been spared from this week’s global market rout.

Bullion is set for its biggest weekly loss since 2016, despite climbing to the highest in more than seven years earlier this week, as investors sell the metal to meet liquidity needs. Volatility continued in equities as markets try to gauge whether emergency fiscal and monetary packages will be enough to stave off a recession amid the coronavirus pandemic that’s hitting the world economy.

The sell off in equities this week has triggered margin calls, with investors looking for opportunities where they can cash in. At the same time, a stronger dollar has also curbed gold’s appeal.

“At extreme periods of stress, absolutely gold tends not to benefit as much as you’d expect,” Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group said in a Bloomberg TV interview. “Gold looks a pretty good bet over the medium term,” he said. “You could even call a 10% to 15% rally a fairly good possibility in the shorter term.”

Spot gold swung between gains and losses, and traded 0.8% higher at $1 588.81 an ounce at 6:35 a.m. in London, following a 3.6% drop on Thursday. Prices are down 5.3% this week, after touching $1 703.39 on Monday, the highest level since December 2012.

Asian stocks pared losses Friday after the S&P 500 Index had its biggest one-day sell-off since 1987 in a wild session that saw market-wide circuit breakers triggered for the second time in a week. Investors are doubting the efficacy of policy responses as coronavirus cases continue to grow across the world and restrictions on people and businesses crush sentiment.

Gold investors will turn their attention to the Federal Reserve’s upcoming meeting after the central bank made an emergency rate cut last week. The Fed offered a huge injection of liquidity to the Treasury market Thursday in moves reminiscent of its quantitative easing program during the financial crisis of 2008. Elsewhere, the European Central Bank unveiled a series of monetary policies Thursday that failed to pacify traders.

“There’s been some existential sort of issues in play which have resulted in gold getting whacked in the shorter term,” Hynes said. “But when I look at all the things that tend to drive gold prices, they still look like they’re going to support significantly higher prices -- bond yields are falling, we expect to see the US dollar remain relatively weak.”

BASE METALS
Among other main precious metals, silver fell as much as 3.1% to the lowest since July. Platinum rose 4% after closing at the lowest since 2003 and palladium surged 5.1% after an almost 20% slump, with Thursday’s losses pushing both into bear markets.

Palladium has been hit particularly hard as fears of the economic fallout from the virus, along with slowing Chinese car sales, batter prices that had surged to a record last month amid the outlook for widening deficit.

Base metals headed for a fourth weekly drop, the longest streak since June, as the virus dims the outlook for economic growth and demand for industrial commodities. Copper fell to the lowest since 2016 and is down 3% this week, the most since January 31.

Iron ore futures in Singapore are up 1% this week after surging 5.8% last week. Investors are monitoring steel rebar inventories in China, which remain at a record as manufacturing slows, as well as the potential for disruptions at Brazilian producer Vale SA.