Gold prices skyrocketed on Monday, giving front-month contracts their biggest ever single-session gain in absolute terms, as investors rushed for the safe-haven asset amid rising fears about the coronavirus impact.
The dollar’s weakness after the Federal Reserve announced its decision to purchase an unlimited amount of Treasurys and securities to support the financial market, supported gold’s uptick.
The dollar index dropped to a low of 101.65, recovered to 102.60 subsequently, before easing to 102.34, trailing previous close by about 0.45%.
Gold futures for April ended up $0.83, or about 5.6%, at $1,567.60 an ounce.
On Friday, gold futures for April ended up $5.30, or about 0.4%, at $1,484.60 an ounce, after edging up marginally a session earlier.
Silver futures for May ended up $0.876 at $13.261 an ounce, while Copper futures for May settled lower by $0.0710 at $2.1005 per pound.
The Federal Reserve today announced extensive new measures, including an unlimited expansion of its asset purchases. The central bank said it will purchase Treasuries and mortgage-backed securities “in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.”
The Fed had previously announced it would purchase at least $500 billion of Treasury securities and at least $200 billion of mortgage-backed securities.
The central bank also announced the establishment of a new program that will provide up to $300 billion in new financing in an effort to support the flow of credit to employers, consumers, and businesses.
The Treasury Department will provide $30 billion in equity to these facilities using the Exchange Stabilization Fund.
The Fed said it will also establish two facilities to support credit to large employers, with the central bank to purchase corporate bonds issued by investment grade U.S. companies.
The central bank has also reinstated the fiscal crisis-era Term Asset-Backed Securities Loan Facility to support the flow of credit to consumers and businesses.
Additionally, the Fed said it expects to announce the establishment of a Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses, complementing efforts by the Small Business Administration.
The Fed had slashed interest rates by 100 basis points last week, lowering the target range for the federal funds to zero to 0.25%.