Gold Price Analysis – Safe havens rally, equities slide, as European COVID-19 cases rise
NEW YORK (Reuters) – Safe-haven assets such as the dollar and U.S. Treasuries edged higher while global equity benchmarks and bitcoin slid on Thursday, weighed by rising coronavirus cases in Europe and a selloff that pushed Chinese blue-chip shares to their lowest levels since early December.
Oil prices sank after surging on Wednesday after a container ship became stuck in the Suez Canal. The ship, which a salvage team described as a “beached whale,” may block the vital shipping lane for weeks, officials said.
European shares fell on data showing the biggest rise in new confirmed coronavirus cases in Germany since Jan. 9 and the largest number of patients with COVID-19 requiring intensive care in France in the year to date.
The dollar index hit its highest since November overnight, at 92.697, breaking its 200-day moving average.
The dollar index rose 0.179%, with the euro down 0.22% to $1.1786.
“The dollar is absolutely critical,” said James Athey, investment director at Aberdeen Standard Investments. “If the dollar starts rallying, that becomes a problem. It means commodity weakness and emerging-market weakness and it starts to provide a disinflationary countervailing narrative.”
MSCI’s gauge of stocks across the globe shed 0.38%, dropping for a second day and was at its lowest in more than two weeks.
Weighing on sentiment was a selloff in Chinese technology shares amid concern they will be delisted from U.S. exchanges on worries about a semiconductor shortage.
In Hong Kong, companies with U.S. listings led declines. JD.com lost 3.57% and Alibaba fell 3.91%.
China’s blue-chip CSI300 index edged 0.05% lower to its lowest close since Dec. 11, weighed by jitters about policy tightening and rising tensions between China and Western countries over allegations of human rights abuses in Xinjiang.
In midday trading on Wall Street, the Dow Jones Industrial Average fell 105.41 points, or 0.33%, to 32,314.65, the S&P 500 lost 14.23 points, or 0.37%, to 3,874.91 and the Nasdaq Composite dropped 96.60 points, or 0.75%, to 12,865.29.
Benchmark 10-year notes last fell 1/32 in price to yield 1.6156%, from 1.614% late on Wednesday.
Investors have focused on the 10-year Treasury yield, pondering whether there is room for long-term interest rates to run, said David Kelly, chief global strategist at JPMorgan Asset Management.
“We know that the economy is primed to begin to really accelerate in the second quarter,” Kelly said. “But we haven’t seen that acceleration yet, so that’s what we’re waiting for.”
The number of Americans filing new jobless claims fell to a one-year low last week, a sign that the U.S. economy is rebounding from the pandemic.
“We’re getting a little softness in the markets on virus-variant jitters, but we’re buyers on weakness as the economy gets closer to a full-scale reopening,” said Cliff Hodge, chief investment officer for Cornerstone Wealth.
U.S. crude recently fell 5.12% to $58.05 per barrel and Brent was at $61.75, down 4.13% on the day.
Spot gold dropped 0.2% to $1,730.04 an ounce, while bitcoin slid nearly 5%.
Reporting by David Randall; Editing by Bernadette Baum and Sonya Hepinstall