Gold slumps over 4% as stocks soar on COVID-19 vaccine euphoria
· Gold tumbled over 4% on Monday as news of the first successful late-stage COVID-19 vaccine trials prompted investors to dump safe-haven bullion and flock to riskier assets.
· Spot gold was down 4.8% at $1,857.61 per ounce, while U.S. gold futures settled down 5% at $1,854.40.
· Spot prices beat a sharp retreat from a near two-month peak of $1,965.33 hit earlier amid a weaker dollar and hopes for more stimulus following Joe Biden’s victory in the U.S. elections.
· Other precious metals also sold off, with silver sliding 7.3% to $23.73 per ounce.
· Platinum falling 2.9% to $863.02 and palladium shedding 0.7% to $2,474.51.
· Equities surged after Pfizer Inc said its experimental COVID-19 vaccine was more than 90% effective. Pfizer and German partner BioNTech SE said they expect to seek U.S. emergency use authorization later this month.
· ″(The news) really exceeded everyone’s best-case scenarios. There was growing nervousness that we might not get a strong vaccine result, so this unleashed the risk-on trade and for gold, signalled a massive exodus of safe-haven plays,” said Edward Moya, senior market analyst at OANDA.
However, he added “the economy is still in need of much support and only 50 million (vaccine) doses will be available, so we’re not in the clear with the virus and the calls for stimulus will be growing.”
· Bullion, a hedge against currency debasement and inflation, has climbed 22% this year, mainly driven by unprecedented global pandemic-led stimulus.
· “If you think that you’re living in the best of all worlds, then you don’t need gold,” said Commerzbank analyst Daniel Briesemann.
“However, this assessment seems to be premature. And we’ve often seen in the past that at prices below $1,900, buying interest will come into the market - we would expect that to happen again this time.”
· Gold Price Analysis: XAU/USD tumbles after Pfizer says covid vaccine 90% effective, levels to watch
A COVID-19 vaccine seems closer after Pfizer announced that its immunization candidate is 90% effective after its 43,500-strong Phase 3 trial. Hopes of a quick solution for the coronavirus pandemic is sending markets higher.
The implication for gold is that the chances of additional vast fiscal and monetary stimulus are diminishing. The US Congress was debating a relief package and the precious metal was moving in response to every twist and turn in the talks.
The levels to watch are $1,880, $1,860, $,850 on the downside, and $1,930, $1965, and $1,972 on the upside. The Relative Strength Index has been flirting with overbought conditions ahead of Pfizer's announcement and is now falling toward 30, oversold conditions.
The Technical Confluences Indicator is showing that significant support awaits at $1,848, which is where the Pivot Point one-month Support 1 hits the price.
· Pfizer, BioNTech say their COVID-19 vaccine is more than 90% effective
· Novavax's experimental coronavirus vaccine gets U.S. FDA's 'fast-track' status
· ‘V-shaped’ recovery on track amid vaccine hopes and Biden win, says Goldman Sachs
· CORONAVIRUS UPDATES:
Total confirmed cases: More than 51,232,780
Total deaths: At least 1,268,905
US cases: At least 10,421,414 (+125,147), and deaths: 244,448 (+641)
· New U.S. COVID-19 cases up 34% last week, set fresh records
· New York governor expects rising coronavirus rates into winter
· WHO chief looks forward to working "very closely" with Biden team
· Biden lauds COVID-19 vaccine progress, White House seeks credit
President-elect Joe Biden hailed Pfizer Inc’s progress toward a COVID-19 vaccine on Monday but urged Americans to wear masks because it may not be widely available for many months, as President Donald Trump’s administration tried to claim credit.
· U.S. still faces possible default wave, asset declines due to pandemic: Fed
The United States may still face a wave of debt defaults and “significant declines” in asset prices because of the coronavirus pandemic and recession, the Federal Reserve warned on Monday, in a stark reminder the economy is far from out of the woods.
“As many households continue to struggle, loan defaults may rise, leading to material losses” for lenders, the Fed said in its latest biannual Financial Stability Report. Business debt “has risen sharply as businesses increased borrowing to weather the period of weak earnings. The general decline in revenues associated with the severe reduction in economic activity has weakened the ability of businesses to services these obligations.”
Asset prices “remain vulnerable to significant declines should investor risk sentiment fall or the economic recovery weaken.”
The comments were issued on a day when U.S. stock markets surged on news that a coronavirus vaccine may be on the horizon -- a possible boon to businesses and households globally.
· As Putin fails to congratulate Biden, experts predict what the result means for US-Russia relations
Now there is likely to be a change in the air when it comes to U.S.-Russia relations.
At the very least, analysts told CNBC before the result that they expected a Biden win to increase tensions between Washington and Moscow, and to raise the probability of new sanctions on Russia.
Any relaxation of U.S. economic sanctions on Russia are likely to be tied to progress on meaningful conflict resolution over Crimea, and in the Donbass region in east Ukraine (where two pro-Russian regions have declared themselves republics).
· “There are rumors of a NATO summit early in a Biden administration that will signal the pre-eminence of the transatlantic relationship and rapidly change the tone of the Trump years,” Chris Skaluba, a former U.S. defense official and director of the Atlantic Council’s Transatlantic Security Initiative, said in a note Saturday.
“Expect a quick effort to put the U.S.-EU relationship on better footing as well.”
· EU to impose tariffs on up to $4 billion of U.S. products
The European Union will slap tariffs on up to $4 billion worth of U.S. products Monday, after what it described as a “lack of progress” from America on resolving a long-standing dispute over aircraft subsidies.
The EU and the U.S. have been at odds over the issue since 2006. The World Trade Organization agreed last year that the EU did not follow best trade practices when granting aid to Airbus. In light of that decision, the U.S. imposed duties on $7.5 billion of imported goods from Europe.
Last month, the WTO also ruled that the United States did not comply with international rules when providing subsidies to Boeing. As a result, the EU has said it is now going ahead with up to $4 billion in tariffs.
· Senate's McConnell says Trump has right to probe election 'irregularities'
The top Republican in the U.S. Congress on Monday said President Donald Trump was well within his rights to look into charges of “irregularities” in last week’s election, which has been called for Democrat Joe Biden, but did not offer any evidence of fraud.
· Trump fires defense secretary in post-election reckoning after policy splits
U.S. President Donald Trump said on Monday that he had “terminated” Defense Secretary Mark Esper, appearing to use his final months in office after his election defeat to settle scores within his administration.
Trump split with Esper over a range of issues and was particularly angered by Esper’s public opposition to Trump’s threats to use active duty military forces this summer to suppress street protests over racial injustice after police killed George Floyd in Minneapolis.
Reference: CNBC, Reuters, Worldometers
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