Gold edges up as virus surge overshadows vaccine optimism
· Gold recovered from a more than 1% dip on Monday as investors weighed immediate concerns over rising coronavirus cases and bets on further economic support even as Moderna became the second drugmaker to declare effective vaccine test results.
· Spot gold was steady at $1,887.10 per ounce.
· U.S. gold futures settled 0.1% higher at $1,887.80.
· Bullion dropped as much as 1.3% after Moderna said its experimental vaccine was 94.5% effective, but this was less than the more than 5% slump after Pfizer last Monday announced its vaccine was over 90%effective.
· “Vaccine is very very good news, but the problem is it’s going to take quite a while to deploy it even in the developed countries,” said Bart Melek, head of commodity strategies at TD Securities, adding the market had already adjusted positioning last week on the Pfizer news.
“Vaccine or no vaccine we’re going to continue to have a hard time economically well into the third quarter of next year, we’re going to need massive amounts of monetary stimulus and we’re very likely to get fiscal stimulus, which ultimately should help move inflation closer to target.”
· Gold, considered a hedge against inflation and currency debasement, has gained over 24% this year, mainly benefiting from global stimulus measures to cushion the effect of the pandemic.
· While markets anticipate a return to normal in the second half of 2021, that “still leaves a massive gap in some of the economies globally that needs to be filled by governments and central banks”, said Saxo Bank analyst Ole Hansen.
· Gold Price Analysis: XAU/USD eyes $1,860 after Moderna's vaccine news – Confluence Detector
Gold has been losing ground after Moderna reported that its COVID-19 vaccine is 94.5% efficient. The Massachusetts-based pharmaceutical company follows in the footsteps of Pfizer and BioNTech, which announced a90% efficacy last week. Additional efforts by AstraZeneca, Johnson&Johnson, and CureVac are eyed.
The growing chances of a quick exit from the covid crisis imply that less fiscal and monetary stimulus would be needed. In turn, the precious metal would have fewer funds to rise on.
How is XAU/USD positioned after the second coronavirus vaccine report?
The Technical Confluences Indicator is showing that gold is facing fierce resistance at $1,877, which is the convergence of the Bollinger Band 1h-Lower, the Fibonacci 23.6% one-month, and the Fibonacci 23.6% one-week.
Further above, another hurdle awaits at around $1,889, which is where several lines hit the price. These include the Simple Moving Average 50-15m, the Fibonacci 23.6% one-day, and the Fibonacci 38.2% one-month.
Looking down, weak support awaits at $1,865, which is a confluence area including the Pivot Point one-day Support 2 and the previous 4h-low.
It is followed by a critical cushion at $1,860, which is where the Fibonacci 61.8% one-day meets the previous month's low.
All in all, resistance is stronger than support, pointing to further downside.
· Russia’s finance ministry is proposing allowing its sovereign wellbeing fund to invest in precious metals, according to a draft amendment of the law published on the government’s website.
· Gold ETFs had the biggest weekly outflow since March as the prospect of a coronavirus vaccine hurt demand for the haven, reports Bloomberg. Investors sold at least 18 tons of bullion from ETFs this week.
· The London Bullion Market Association (LBMA) sent a letter to countries with large gold markets threatening to blacklist them if they fail to meet standards on money laundering and responsible gold sourcing, reports Reuters.
The letter says nations that don’t declare support for LMBA standards by December 11 and share plans on how to implement them by the end of January won’t be able to supply LBMA-accredited refiners. This is the latest initiation to crack down on illegal or unethical gold trading.
· SSR Mining cut its gold production forecast for its Seabee mine for the fiscal year. Production for the third quarter was down 37% year-over-year of 20,249 ounces. Despite the negative news, its stock rose as much as 10% in intraday trading on Thursday due to its start of a 5-cent quarterly dividend policy.
· PRECIOUS METALS OPPORTUNITIES vs THREATS
+ UBS GROUP:
UBS Group sees platinum at $1,150 an ounce by the end of 2021 due to a resurgence of industrial activity and supply disruptions at Anglo Platinum’s converter plant. UBS also still believes that gold could trade to $2,000 an ounce in the coming months on expectations of another U.S. stimulus package.
+ GOLDMAN SACHS
Goldman is also bullish on gold. The bank is targeting gold at $2,300 an ounce next year due to reflation pushing near-term real rates lower. Analysts said in a report that gold is primarily bought as a hedge against dollar debasement, and the bank expects its to be more sensitive to short-term real rates, akin to currency markets.
- DIWALI
Diwali began this week but record high gold prices in India could erode demand for jewelry. Festival season in the world’s second largest gold consuming country is usually a strong time for gold buying in the form of jewelry. Record prices and the ongoing pandemic will likely hurt sales this year.
- BIG SOLD GOLD
Quarterly 13 F filing released over the coming days could show that big investors have sold gold positions in the quarter ended September 30. Bloomberg speculates that after bullion peaked above $2,000 an ounce August and then backtracked to below $1,900, big money managers could have sold their gold or gold mining stakes.
· Silver eased 0.1% to $24.61 per ounce. Platinum rose 3.2% to $916.98, while palladium climbed 0.2% to $2,327.44.
· CORONAVIRUS UPDATES:
Total confirmed cases: More than 55,334,998
Total deaths: At least 1,331,697
US cases: At least 11,533,598 (+157,690), and deaths: 252,631 (+719)
· ‘Rule of the jungle’: Health expert sounds the alarm on fair access to Covid vaccines
High-income countries have adopted an approach akin to the “rule of the jungle” when it comes to securing supplies of prospective coronavirus vaccines, according to an expert in global health, governance, and infectious diseases.
It is likely to have significant repercussions for the volume of vaccines available for low-income countries in the coming months, Suerie Moon, co-director of the Global Health Centre at the Graduate of Institute of Geneva, told CNBC Monday.
The race to deliver a vaccine coincides with a scramble to secure future supplies, even before their safety and efficacy have been established.
She added that all countries should introduce a set of arrangements to ensure that health workers, people with underlying medical conditions, and older people are among those to have priority access to any prospective vaccines.
· Faster recovery odds have risen with vaccine developments: Fed's Clarida
Successful tests of two coronavirus vaccine candidates have increased the chance of a faster than expected U.S. economic recovery, Federal Reserve Vice Chair Richard Clarida said on Monday.
· 'More people may die,' Biden says, if Trump goes on blocking pandemic cooperation
President-elect Joe Biden said on Monday “more people may die” if outgoing President Donald Trump continues blocking a U.S. transition of power as the coronavirus pandemic worsens, and he urged Congress to pass new relief legislation.
Biden said business and labor leaders had signaled willingness to work together to bolster the pandemic-battered U.S. economy but stressed COVID-19 first must be brought under control.
· Philadelphia bans all indoor gatherings as COVID-19 surges across the United States
· Paris politician Pecresse wants some shops to reopen for November 27 'Black Friday'
· Germany postpones decision on further COVID-19 curbs
German federal and state leaders agreed to postpone until Nov. 25 a decision on further restrictions to slow a second wave of coronavirus infections, Chancellor Angela Merkel said on Monday, two weeks into a month-long partial lockdown.
· German economy minister says EU supply chains to remain intact
Supply chains within the European Union are intact and will remain intact despite the COVID-19 pandemic, German Economy Minister Peter Altmaier said on Monday.
· Europe's spending surge will not make debt unsustainable: ECB
A surge in public spending across Europe to contain a pandemic-induced recession will not make debt levels unsustainable, even if some euro zone members are sitting on excessively large debt piles, European Central Bank chief economist Philip Lane said.
Governments are running up record deficits this year to keep their economies going amid partial lockdowns and public debt will exceed 100% of GDP this year, with further small rises seen next year and in 2022.
The ECB has kept borrowing costs record-low but has long argued that governments, not the central bank, need to do the heavy lifting in sustaining the economy until a vaccine is deployed and restrictions are lifted.
But the European Union’s plans to deploy 750 billion euros (£673 billion) in a recovery fund were dealt a setback on Monday when Hungary and Poland blocked the scheme, raising the risk that funding will be delayed.
· Hungary to raise political veto over EU budget on rule-of-law conditions: report
Hungary plans to raise a political veto on the European Union’s 2021-27 budget later on Monday over the proposal to tie disbursement of EU funds to rule-of-law conditions, the web site portfolio.hu reported on Monday.
· EU official says may already be too late for UK trade deal
A senior EU official said on Monday it was getting “terribly late” to seal a new trade deal with Britain and that it “may be too late already” to put in place any agreement before 2021, even if Brexit negotiators seal it this week or the next.
Ireland, the EU state most exposed to Brexit, said on Monday Britain and the bloc had up to 10 days to unlock talks to prevent tariffs and quotas from eating into an estimated trillion dollars worth of annual trade in just over six weeks.
· Britain 'has choices to make' on new trade deal, EU diplomats say
Britain “has choices to make” if it wants a new trade deal with the European Union, three EU diplomatic sources said on Monday, adding that Brexit negotiators had yet to come up with mutually acceptable solutions for the three most contentious issues.
Ireland, the EU member state most exposed to Brexit, said Britain and the bloc had up to 10 days to unlock talks to avoid tariffs and quotas kicking in from Jan. 1, 2021, slashing an estimated trillion dollars worth of annual commerce.
· Wisconsin recount would cost Trump campaign about $7.9 million, state officials say
The Wisconsin Elections Commission said on Monday that a statewide vote recount would cost an estimated $7.9 million, money that President Donald Trump’s campaign would have to pay in advance should it request one.
President-elect Joe Biden won the crucial battleground state in the Nov. 3 election by a margin of 0.7 percentage point, or about 20,000 votes, with 99% of ballots counted, according to Edison Research.
Reference: CNBC, Reuters, FXStreet, Kitco, Worldometers
Thai
Eng