For Gold Bulls, Halloween did not finish within the air regardless of Thanksgiving
By Barani Krishnan
Investing.com – Another Monday, Another Gold Bull Nightmare. Thanksgiving might be in the air, but for the gold safe crowd, Halloween never seems to be over.
Gold fell to four-month lows below $ 1,835 an ounce as risk appetite rose again in the markets and a stronger dollar diverted money from the yellow metal into stocks and other risk-weighted assets such as.
settled $ 34.60, or 1.8%, at $ 1,837.80 an ounce on New York’s Comex. The session low was $ 1,828.25 – a low that hasn’t been seen since July 17, when the U.S. gold futures contract fell to $ 1,821 in the first month.
The collapse in gold futures was spectacular, especially as it hit an even deeper low than what reflects real-time trading in gold bars. Spot Gold’s low for the day was just $ 1,831.08.
Wall Street was up 0.8% while that was up 0.2%.
The trigger for the collapse of gold was eerily similar to two Mondays ago, although the actual loss – or shock value – was more subdued this time: Once again, advances in a Covid-19 vaccine dealt gold bulls a knockout blow, this time from AstraZeneca (NASDAQ :).
The Anglo-Swedish pharmaceutical company said clinical studies have shown its Covid-19 vaccine is 70% effective against the virus and can reach 90% on a second dose. It could also be kept in a regular refrigerator and is likely a lot cheaper than a competitor vaccine from Pfizer (NYSE 🙂 which announced a 95% effectiveness rate but super freeze storage conditions two mondays ago.
Pfizer’s announcement dropped gold 5% on November 11th. The yellow metal also lost 3% in the days that followed after progress was reported on another Covid-19 vaccine Modern (NASDAQ 🙂 on November 18th.
“Gold doesn’t particularly like all of this vaccine news and is again on the low end and within a whisker of great support,” said Craig Erlam, an analyst at OANDA in New York. “The next support down here is at $ 1,800, and we could see that it tested very quickly.”
Gold charterer Guillermo Alcala agreed on a blog on FX Live, saying:
“Below the daily low of $ 1,830, the next areas of interest would be $ 1,795 (mid-July lows) and $ 1,760, the 50% Fibonacci retracement of the March-July rally.”
AstraZeneca news aside, Regeneron (NASDAQ 🙂 ‘s coronavirus antibody cocktail, used by President Donald Trump when he was hospitalized with Covid-19 last month, got approval from the Food and Drug Administration for granted the emergency.
In addition, the chief scientific advisor to Operation Warp Speed - the US Covid-19 vaccination program – said over the weekend that Pfizer and its German partner BioNTech will likely be approved by the US Food & Drug Administration to deal with the immunization of Americans against the US to start virus by December 11th.
Together, it was a cocktail of vaccines and therapeutics enough to calm a gold market that has struggled to hold in the region of $ 1,800 to $ 1,900 since it lost its record highs of over $ 2,000 in August. Logically, gold can rally for two reasons – fears of further Covid-19 lockdowns that could cripple the economy, or out-of-hand economic spending to fix the pandemic-hit economy.
As vaccines progress, the likelihood of shutdowns is less. Another Covid-19 incentive – similar to the one back in March that helped lay the foundation for $ 2,000 gold – also seems like a breeze, with the Senate Republicans and the outgoing Trump administration taking the Democrats in House of Representatives and the government hardly support new government in Biden to get a new bipartisan financial package in motion.
With that in mind, the Democrats who control the House reached a deal with the Trump administration and Senate Republicans in March to end the Coronavirus Aid, Aid and Economic Security (CARES) incentive. That package spent approximately $ 3 trillion in employee paycheck protection, corporate loans and grants, and other personal assistance to skilled citizens and residents.
Since then, both sides have found themselves in a stalemate due to a successive relief plan for CARES. The dispute had basically gotten past the size of the next stimulus as thousands of Americans, especially those in the airline sector, risked losing their jobs without further help.
“I am still not convinced that we have seen the end of the gold surge and there is much more momentum on the horizon,” said OANDA’s Erlam. “The Fed and the European Central Bank are likely to trigger a delayed deal on tax support in December more in response to the recent surge in Covid and, in the case of the former. That should also come what gold could give back its spark. “