Gold prices finished lower on Tuesday, failing to find support from the recent plunge in the U.S. stock market as equities tried to bounce back and the dollar held relatively steady.
April gold GCJ8, -0.70% fell $7, or 0.5%, to $1,329.50 an ounce, after a modest decline Monday. Prices had earlier climbed to as high as $1,349.30.
“Gold isn’t guaranteed to rise when equities fall. Indeed, it may drop amid a severe crash if fund managers sell to cover losses on other assets,” said Adrian Ash, director of research at BullionVault.
“But that is part of gold’s role as insurance, because it offers a deep and uniquely liquid market of diverse buyers, from microchip makers to Chinese households celebrating New Year as well as investors,” he said.
U.S. stocks eventually headed higher Tuesday in volatile trading, with the Dow Jones Industrial Average up trading little changed in recent action, after ending Monday with a more than 1,100-point loss—the largest on-day point drop in history.
Against this backdrop, “gold isn’t acting like a haven because there is no real panic in the market,” said Naeem Aslam, chief market analyst at ThinkMarkets.