In one week, gold plunged 9%, its biggest drop in almost thirty-seven years.

As the stock markets collapsed under the impact of successive announcements concerning the coronavirus, the precious metal suddenly lost its safe haven. This is the worst week for gold since … 1983. The yellow metal had however reached a peak of seven years, last Monday, at 1,700 dollars, while oil prices unscrewed, following the rupture of the OPEC+ alliance.

But the trend was abruptly reversed when the WHO (World Health Organization) declared the pandemic stage for the coronavirus, and the United States closed its borders to Europe. Gold crashed, losing nearly $200.

A plunge in unison with the stock markets, which is very unusual, since usually, when stocks fall, gold rises, it is a safe haven asset for investors.

Mop up the losses

But this safe haven for the precious metal has disappeared this time. Investor losses on other assets, such as equities and commodities, have been too high. Forced to pay heavy margin calls, they sold their gold to cover their losses.

Gold is not the only precious metal to suffer. Silver lost almost 9%, its biggest drop since 2011. Platinum suffered its biggest weekly drop in its history, as did palladium: -34% in one week!

Palladium had however become more expensive than gold, thanks to the return to grace of gasoline cars in Europe, which use more palladium than diesel cars, in the exhaust pipes.

Two simultaneous losses for the palladium

But the precious metal is experiencing two simultaneous reversals of fortune: the announcement by BASF and two South African mining groups of a process to replace palladium with more platinum, which is cheaper, in catalysts, suggests that we will be able to remedy the deficit that had caused the price of this metal to soar. And palladium is suffering, like gold, from the backlash of the fall in the stock markets, panicked by the progression of the coronavirus and its consequences on trade.