If you wanted a sector of the ASX not to be in today then gold would be it.
While the overnight futures market had a modest 60 point or so gain pencilled for the start of trading later today, the $US60 slump in the price of gold on Friday is a figure than will send tremours through our already battered gold sector on the ASX.
The ASX All Ordinaries Gold Index fell 2.6% on Friday and 19% last week as gold fell in the face of the wild swings on share and bond markets.
While shares in Newcrest, the sector leader, jumped 2.9% on Friday from the Wednesday and Thursday sell-off in the wake of a production downgrade, it still lost 14% over the week and will add to that today.
The big falls were typical last week. Evolution shares lost 12.9% last week, St Barbara shares shed 26.3%, Saracen lost 25% and shares in Northern Star well 23%.
Trump’s speech announcing a national emergency and saw gold trim its earlier $US73 an ounce fall around $US60 in late trading to around $US1,529, while oil kicked up a couple of bucks a barrel in New York to end around $US33.20 a barrel.
The US dollar firmed, sending the Aussie dollar under 62 US cents to new multi-year lows.
The yield on 10 year US bonds climbed again to end just shy of 1% at 0.992%. It started Friday at 0.77% and touched a day’s high of 1.015%.
The weakness in the Aussie dollar will offset the slump in the futures price a little, but not by enough to help the local sector today.
“It seems that investors have been selling gold in order to cover losses elsewhere,” said Caroline Bain, chief commodities economist at Capital Economics, in a note.
“Ample liquidity in the gold market means that the sale of gold holdings is a relatively quick and seamless way to raise cash in times of need,” she wrote, according to Marketwatch.com.
Prices for the most-active Comex gold contract lost 9.3% last week, according to FactSet data.