Gold Pauses Climb as Investors Liquidate to Cover Equities, Oil Rout

Gold Pauses Climb as Investors Liquidate to Cover Equities, Oil Rout

The rout in equities and oil is “costing” gold in a peculiar way.

While stocks are a contrarian bet to gold, higher oil prices typically aid the rise of the yellow metal, seen as a hedge against inflation.

But with crude oil oil prices tanking 7% on Tuesday and stocks tumbling simultaneously, investors were cashing out of relatively-stable gold to cover losing positions in the other assets.

“Gold rally temporarily on hold as rush to cash in and cover equity and crude oil markets has overshadowed bullion-related portfolios,” George Gero, precious metals analyst at RBC Wealth Managerment in New York, said.

COMEX gold for December delivery settled down $4.10, or 0.3%, at $1,221.20 per troy ounce.

After a test to its crucial $1,200 support, gold has been propped up again this week by concerns about Brexit and British Prime Minister Theresa May’s hold on power, as well as skepticism about a US-China trade deal happening on the sidelines of the G20 meeting.

Last week, December gold rose 1.4% for its best weekly gain in five as hedgers rushed to the relative safely of bullion due to a growing risk-off environment.

The dollar index, another contrarian bet to gold, was up 0.7% at 96.72.

Among other precious metals on COMEX, silver slipped 0.8% to $14.29 per ounce.

Palladium slid 1.6 % to $1,222.60.per ounce, while sister metal platinum fell 1.6% to $844.30.

In base metals, COMEX copper declined 1.5% to $2.76 per pound.

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