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Stock Rout Is Now So Severe Even Gold Hurts as Margin Calls Seen

  • StanChart’s Cooper says bullion may be sold off to cover calls
  • Gold’s at mercy of ‘asset-liquidation scenario,’ AxiCorp says
Gold bars
Photographer: Lisi Niesner/Bloomberg
Updated on

Gold’s performed well in February as the risk-off mood swept markets, but its rally hit a wall this week despite the brutal rout in global equities driven by the coronavirus crisis. Standard Chartered Bank says that may come down to investors selling the metal to cover margin calls.

While bullion has rallied amid both risk-on and risk-off episodes, it could suffer from further profit-taking as it’s used to meet the calls amid the sharp declines in stocks, precious metals analyst Suki Cooper said in a note. Still, barring near-term profit-taking, risks for prices remain to the upside amid expectations that the Federal Reserve will cut interest rates twice this year.