Gold inches lower as Covid-19 vaccine optimism weighs on appeal
Gold prices edged lower on Wednesday due to optimism over a potential Covid-19 vaccine, but concerns over the economic impact from the resurgence of coronavirus cases in the United States limited their decline.
Spot gold fell 0.1% to $1,877.39 per ounce by 0344 GMT, while U.S. gold futures were down 0.5% at $1,875.30.
Gold shed as much as 1.3% on Monday after Moderna said its vaccine was 94.5% effective in preventing Covid-19 in a late-stage trial.
“There is a lack of catalyst for gold prices to rally … Weighing on prices is a slight depressing of inflation expectations because it’s quite clear now that the U.S. fiscal stimulus will probably not be as sizeable as previously imagined,” said IG Markets analyst Kyle Rodda.
The emphasis is now on the Federal Reserve to support the U.S. economy through the surge in coronavirus, he added.
Fed chair Jerome Powell said on Tuesday there is “a long way to go” for the economy to recover and that the central bank is committed to using all its tools to support the recovery for as long as required.
Highlighting the grim effect of the pandemic, data showed U.S. retail sales rose less than expected in October and could slow down further amid declining household income as millions of unemployed Americans lose government financial support.
Gold, considered a hedge against inflation and currency debasement, has gained over 24% this year, mainly benefiting from massive global stimulus.
A weak dollar, intensifying pandemic and expectations of fresh U.S. stimulus may restrict major downside in gold, said Hareesh V., head of commodity research at Geojit Financial Services.
However, a break of stiff support at $1,840 could take gold prices lower to $1780-$1,750 or more, he added.
Silver fell 0.2% to $24.41 per ounce. Platinum was down 0.1% at $924.08, while palladium eased 0.2% to $2,312.53.
