Gold, palladium rebound, but set for sharp weekly fall

Analyst says recovery after panic selling across all asset classes has supported precious metals too

WASHINGTON: Gold rose slightly on Friday as investors weighed the economic hit from the coronavirus outbreak and as financial markets stabilised a bit after a rout, but the bullion was still headed for its worst week in more than three years.

Autocatalyst metal palladium also rose as much as 8%, after having plunged nearly 28% on Thursday in a global sell-off. It, however, was on track to record its biggest weekly fall ever.

Spot gold was up 0.8% to $1,588.83 per ounce by 0703 GMT, having fallen more than 1% earlier. For the week, the precious metal is down 5.1% - the most since November 2016 - including Thursday's 4.5% slide.

US gold futures fell 0.1% to $1,589.20.

"The recovery after panic selling across all asset classes has supported precious metals too," said Jigar Trivedi, a commodities analyst at Anand Rathi Shares and Stock Brokers in Mumbai, adding that fears over the wider spread of the virus supported the metal.

European and US stock futures are trading in positive territory and some of Asia's deepest losses were recovered by the end of a day where tight liquidity exaggerated moves.

"Across markets, we're seeing a bit of a risk-on, and it feels counter-intuitive to think gold as risk-on asset but if you look at what went on in the last 48 hours, gold fell with stocks," said DailyFx currency strategist Ilya Spivak.

Countries and central banks have ramped up measures to cushion their economies from the pandemic, which has infected over 127,000 people worldwide.

The US Federal Reserve provided massive liquidity injection on Thursday, having slashed its benchmark interest rate last week.

Palladium rose 7.2% to $1,962.97 per ounce, following a steep fall in the previous session, but was headed for a weekly decline of about 24%.

Palladium and platinum "are much more volatile and much less liquid. So, the moves are just exaggerated ... but the reason is basically the same," DailyFx's Spivak said, pointing to gains across assets.

Platinum gained 4.1% to $794.28, but was down 11.5% for the week - the steepest dip since 2010.

Silver was the only exception, falling 1.1% to $15.65 per ounce, having earlier dipped up to 3.3%.