By Barani Krishnan
Investing.com – “When China sneezes, the world catches a cold” is the saying. While the republic’s coronavirus crisis has certainly infected global markets, a stimulus injection by its central bank into the Chinese money market provided a different sort of chill for the gold market Tuesday.
Gold futures for April delivery on New York’s COMEX slumped by $26.90, or 1.7%, to settle at $1,555.50 per ounce, the sharpest one-day fall since Nov. 7. The April contract also hit a two-week high of $1,552.85 earlier in the session.
Spot gold, which tracks live trades in bullion, was down $21.91, or 1.4%, at $1,554.14 per ounce by 3:40 PM ET (20:40 GMT), after a two-week low at $1,549.11.
Until Tuesday’s slide, gold had held firmly in the $1,560-$1,590 range, attempting a return to January’s seven-year highs above $1,600.
“A large capital infusion in China has improved sentiment and risk appetite across markets, though this slide in gold itself may prove a good buying opportunity for other investors in the yellow metal,” said George Gero, precious metals analyst at RBC Wealth Management in New York.
Gold’s slump came after the People's Bank of China said it will inject a total of 500 billion yuan ($71.4 billion) into the money market to "maintain reasonable and adequate liquidity in the banking system during the period of epidemic prevention and control."
This stimulus helped Chinese stock markets close higher after Monday’s sharp losses and translated into gains in both Europe and Wall Street.