Gold drops to 4-month low on Covid vaccine hope, signs of economic recoveryAdministrator_India | November 25, 2020 | 0 | Commodity Broker
Gold fell to a four-month low as growing optimism over a coronavirus vaccine and signs of a increasing momentum in US economic growth stifled demand for the metal as a haven.
Bullion extended last week’s loss after AstraZeneca said its vaccine prevented most people from developing Covid-19, marking another promising development in the quest to end the pandemic US business activity powered ahead in November at the fastest pace since March 2015, IHS Markit figures Monday showed. The dollar erased losses after the report.
Gold prices have posted two straight weekly declines and holdings in exchange-traded funds backed by the metal have slipped as hopes for a virus vaccine buoyed markets and curbed demand for haven assets. Improving US economic growth could dim chances for economic stimulus, which had helped drive gold to a record in August, analysts said US stocks rose on Monday.
“The fear of missing out seems to be more important, so even ETFs are selling,” George Gero, a managing director at RBC Wealth Management, said by phone. “That I think is causing a little selling in the gold market for now.”
Spot gold declined 1.8 per cent to $1,837.60 an ounce at 2:27 pm in New York after touching the lowest since July 21. Silver and platinum also fell, while palladium rose. Gold is trading firmly below both its 50- and 100-day moving averages, and Georgette Boele at ABN Amro Bank NV said the metal dropped further on Monday after breaking through its $1,850 support level.
“Gold prices broke through technical support, catalyzing a rush to the exits,” said Daniel Ghali, a TD Securities strategist. “For weeks, capital outflows from ETFs have added pressure to gold markets as a second wave sweeps across the globe, keeping inflation expectations capped, while the vaccine announcements have also seen safe-haven flows reverse.”