Gold price moves on 12th March 2020 opening up attractive entry points
Veröffentlicht am 13. März 2020
Gold prices fell 3% on 12th March in what looks like selling to meet liquidity needs while nominal US Treasury yields also rose from intra-day low of 0.64% to an intraday high of 0.91%, most likely due to the same phenomenon. Gold and Treasury Inflation Protected Securities (TIPS) are moving in a similar fashion, as shown in Figure 1. Sharp declines in equity and other cyclical markets on 12th March (e.g. S&P 500 down 10% and oil down 7%) were setting off circuit breakers and triggering the selling of high quality, liquid assets very likely in order to meet margin calls. We saw a similar decline in gold prices at the end of February (although that did not come with a Treasury sell-off). We believe that gold and Treasuries are doing their job, acting as liquid assets in times of stress. Further violent moves in equities could trigger more gold selling on a temporary basis. However we also believe that if gold proves its worth, by being a source of liquidity when markets are under duress, we are likely to see demand rise.
Figure 1: Gold (yellow, left) price vs. US 10-year TIPS Yields (white, right, inverted axis)
Source: Bloomberg, data from 00:00 10th March 2020 to 08:00 13th March 2020. Historical performance is not an indication of future performance and any investments may go down in value.
Looking back at the global financial crisis, gold prices initially fell in October 2008 alongside equities. By November 2008, the gold price started an upward rally, that ultimately saw it rise 170% by August 2011 (Figure 2).
In 2008, the initial price declines were widely attributed to margin calls and liquidity needs. If history is any guide to the future, the price declines on 12th March may have opened up good entry points for investors seeking access to a safe-haven asset.
Figure 2: Gold (green ,left) vs equities (white, right) in Q4 2008
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Über den Autor
Head of Commodities and Macroeconomic Research, WisdomTree Europe
@NiteshShahWTNitesh Shah ist ein Finanzexperte mit über 24 Jahren Erfahrung in den Bereichen Research und Anlagestrategie. Als Head of Commodities & Macroeconomic Research bei WisdomTree Europa leitet er Marktanalysen und -einblicke für die verschiedenen Anlageklassen, wobei sein Schwerpunkt auf Rohstoffen und börsengehandelten Produkten liegt. Zuvor war er bei Moody's, HSBC Investment Bank, The Pension Protection Fund und Decision Economics tätig, wo er sein Fachwissen in den Bereichen Marktanalyse und Strategie vertiefte. Nitesh Shah hat einen Master-Abschluss in internationaler Wirtschaft und Finanzwesen von der Brandeis University und einen Bachelor-Abschluss in Wirtschaftswissenschaften von der London School of Economics. Seine Einsichten werden häufig in den Finanzmedien zitiert und er ist ein gefragter Redner bei Branchenveranstaltungen. Außerdem ist er Moderator des Podcasts „Commodity Exchange“, in dem er über Trends auf den globalen Märkten spricht. Nitesh Shah begeistert sich für die Beratung von Anlegern und bietet ihnen umsetzbare Erkenntnisse, die ihnen bei der Orientierung in der komplexen Finanzlandschaft helfen.