Gold pricing has been very illiquid and spreads have been widening to unprecedented levels for the past 2 days. We received news from various banks and liquidity providers that the volatility and subsequent spread widening are due to a breakdown in Exchange for Physical (EFP) gold. Accordingly, refineries are shutting down and market makers who had short EFP positions are being adversely affected. Currently the Gold futures market is facing backwardation and the spot and futures prices have widen as much as $70 per oz on 24th March.
Point to note, there is no shortage of Gold in the market, just that at this point of time, demand overwhelms supply and the Gold supply chain is greatly affected due to measures announced by Governments to stem the threat of Covid-19 globally.