Gold futures traded lower on Monday, as investors sell the precious metal to generate cash to cover margin calls on the back of a decline in the U.S. stock market.
Bullion’s decline on Monday came amid news that a large investment fund, Archegos Capital Management, had dumped $30 billion in holdings, including big positions in ViacomCBS VIAC,
“The Archegos margin call default is threatening to cause major losses at some investment banks and has put contagious pressure onto the equity markets over the weekend,” with the result that gold has come off said Rhona O’Connell, head of market analysis, EMEA and Asia regions at StoneX.
“This is perfectly normal,” she said in Monday’s newsletter. “ Almost invariably when the equities markets come under pressure gold will come down also.”
“When other markets are suffering and there is the possibility of margin calls or a loss of liquidity or a simple financial loss, gold is one of the first assets to be sold in order to raise cash and minimise the damage,” she said.
Gold for April delivery GC00,
Metals futures face a holiday-shortened week. Commodity and other financial markets will be closed on Good Friday this week.
Meanwhile, the U.S. dollar edged up by 0.2% to 92.92, as measured by the ICE U.S. Dollar Index DXY,
Palladium led the losses on Comex Monday, with the June contract PAM21,
Nornickel on Monday said it completed phase two repairs at two major mines in Siberia. It expects the Oktyabrsky mine to fully resume production in the first 10 days of May and the Taimyrsky mine to resume output in early June.
“This could be negative for palladium over a very concise term as the last estimate was about 12 weeks for repairs to be complete,” said Stephen Innes, chief global markets strategist at Axi, in a market update.
Rounding out action on Comex, the most-active July platinum contract PLN21,