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Gold rebounds from 5-month lows as virus fears outweigh vaccine cheer

· Gold prices recovered from five-month lows on Tuesday as worries over spiking Covid-19 cases offset optimism around vaccine developments and nudged investors towards the precious metal.

· CORONAVIRUS UPDATES:

· Some Americans could begin receiving coronavirus vaccinations before Christmas, a top government official said on Monday, helping drive Asian shares higher after a record-breaking month.

Dimming the economic outlook, however, Covid-19 cases topped 1.1 million in the United States last week, with California weighing fresh curbs such as stay-at-home orders.

· Following sharp losses in the previous two sessions, spot gold rose at $1,811 per ounce by 0349 GMT. U.S. gold futures gained $38 to $1,818.9.

· Gold clocked its worst monthly fall in four years on Monday, falling to $1,764.29 per ounce, the lowest level since July 2.

· “Gold has been a crowded trade for quite a while, so we’re seeing a realignment of asset allocation away from gold and towards more risky assets as the (market) sentiment is improved,” said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide.

· “That being said, those flows can quickly reverse again as the economic situation becomes more apparent.”

· Investors’ focus now turns to Federal Reserve chairman Jerome Powell’s testimony before the Senate Banking Committee later in the day, which will offer clues on the direction of monetary policy.

If the U.S. Federal Open Market Committee meeting in two weeks shows more monetary accommodation it will restoke inflationary fears, said Howie Lee, an economist at OCBC Bank.

· The factors that drove bullion’s recent rally remain intact, Lee said, adding that he remained constructively bullish on gold and expects its rally to resume in 2021.

· Non-yielding gold is seen as a hedge against inflation likely to result from large stimulus measures.

· Gold price starts December above $1,800 following dismal November – Commerzbank

Carsten Fritsch, precious metals analyst at Commerzbank, noted that gold price dropped 5.4% last month, its worst monthly performance in four years. The gold market saw continued selling pressure last month as investor sentiment was boosted by news of three potential vaccines for the COVID-19 virus

Although investor demand has weakened in the last few months, Fritsch said that other vital sectors of the market are starting to pick up, particularly in critical Asian markets.

"News from India offers a glimmer of hope," he said. "Gold demand there apparently picked up noticeably last week on the back of lower prices. A revival of physical demand in Asia would make an important contribution to stabilizing the gold price. And in turn, it would need to stabilize to restore the badly-shaken confidence of ETF investors in gold."

· McConnell shoots down bipartisan $900 billion coronavirus stimulus plan as stalemate drags on

Senate Majority Leader Mitch McConnell rejected a proposed bipartisan coronavirus stimulus package Tuesday amid months of congressional inaction on curbing the economic damage from the outbreak.

McConnell said a must-pass spending bill and pandemic relief provisions will “all likely come in one package.” Congress needs to approve funding legislation by Dec. 11 to avoid a government shutdown.

It is unclear whether lawmakers can craft a plan that can get through both chambers of Congress before the end of the year, when many programs expire. Democrats have opposed liability protections and pushed for a $600 per week supplemental jobless benefit, while the GOP is against new state and local aid.

· Mnuchin, Powell hone in on need to aid U.S. small businesses

Top U.S. economic officials on Tuesday urged Congress to provide more help for small businesses amid a surging coronavirus pandemic and concern that relief from a vaccine may not arrive in time to keep them from failing.

“These businesses cannot wait two or three months,” Treasury Secretary Steven Mnuchin said during a hearing before the Senate Banking Committee, urging lawmakers to put as much as $300 billion into grants for struggling businesses.

His comments came amid some renewed momentum for a pandemic aid package, with Republicans and Democrats acknowledging the next few weeks will be critical in determining whether the country’s better-than-expected recovery can be coaxed along until the impact of the pending vaccine is felt -- or will weaken as benefits to families expire and the coronavirus continues spreading.

· NY Fed's Logan says Fed emergency lending programs could be revived if needed

· Fed's Evans says economy 'screams out' for more fiscal help

The U.S. central bank is already doing “quite a lot” to boost the economy and has little scope to do much more, Chicago Federal Reserve Bank President Charles Evans said on Tuesday, calling again for more fiscal help from the U.S. Congress.

· Treasury nominee Yellen warns of 'self-reinforcing' U.S. downturn, vows to aid needy

Yellen, who previously served as U.S. Federal Reserve Chair, spoke at an event in Delaware where Biden formally introduced his top economic policy advisers as he prepares to take office on Jan. 20 amid a battered economy and large-scale job losses.

“It’s an American tragedy and it’s essential that we move with urgency. Inaction will produce a self-reinforcing downturn, causing yet more devastation,” Yellen said.

Yellen said the pandemic has disproportionately impacted the most needy Americans. Yellen said it is important to make sure the economic recovery leaves out no one as she pledged to “find collective purpose to control the pandemic and build our economy back better than before.”

· One chart shows how bad Germany’s second wave of the coronavirus is

The 7-day average number of deaths from Covid-19 stood at 306.71 on November 29 — significantly higher than the peak of 248.43 seen on April 21, data from Johns Hopkin University shows.

· Pfizer, BioNTech apply for Covid vaccine approval in Europe

U.S. pharmaceutical giant Pfizer and its German partner BioNTech said they have applied to the European Medicines Agency for the conditional marketing authorization of their coronavirus vaccine.

If the authorization is granted, it could enable use of the vaccine in Europe this month, BioNTech said.

· CDC panel says health workers, nursing homes will get Covid vaccine first

· American, United pause nonstop flights to Shanghai amid concerns over restrictions facing overseas crews

American Airlines and United Airlines are pausing plans to operate nonstop flights to Shanghai, China from the U.S. following reports of lengthy waits facing airline crews upon arrival, limited local accommodations and restrictions on their movement in the country, according to people familiar with the matter.

They will instead route the flights with a stop in South Korea, the people said, asking not to be named because they aren’t authorized to talk about it.

· Euro zone agrees to overhaul bailout fund in a move likely to appeal to investors

Euro zone finance ministers have agreed to strengthen the region’s crisis bailout fund — a long-awaited step that addresses how investors view the region.

The 19-member area is often criticized for not tackling the disparities among its economies. The differences between southern nations, which tend to have high levels of government debt, and the more fiscally hawkish northern countries have caused tensions when the euro zone was trying to address its sovereign debt crisis in 2010.

The bloc’s finance ministers took a key step Monday in bridging these differences.

· George Soros has changed his mind on Europe amid doubts over the future of the EU

George Soros has changed his mind about how the European Union should finance the costs of the coronavirus pandemic, warning investors have now lost faith the political bloc will survive.

The billionaire investor had previously said the EU should issue “perpetual bonds” — meaning the principal amount of the money borrowed would never be repaid, only the annual interest payments. It assumes the EU would last forever and therefore keep paying the interest back to the lender. Perpetual bonds are also designed to allow the region to fund projects at very low costs.

· Australia's economy rebounds sharply in third quarter, beats forecast

The economy expanded by 3.3% in the three months to September, data from the Australian Bureau of Statistics (ABS) showed on Wednesday. Economists in a Reuters poll had forecast a 2.6% rise after a 7% contraction in second quarter.

Despite the brisk pace of quarterly growth, GDP still contracted 3.8% on an annual basis, suggesting the recession-stricken economy is not out of the woods yet and that policy support will be needed for some time.

The rebound was led by household spending, which rose 7.9%, the data showed.

But annual output is not expected to reach pre-COVID levels until late next year, provided Australia is able to keep the virus at bay.

· Biden legal team says Trump lawsuits will not change Georgia outcome

· Despite Trump's continued claims, Barr sees no sign of major U.S. vote fraud

U.S. Attorney General William Barr said on Tuesday the Justice Department had found no evidence of widespread voter fraud in last month’s election, even as President Donald Trump kept up his flailing legal efforts to reverse his defeat.

Trump family urges U.S. appeals court to move marketing scam lawsuit to arbitration

Reference: CNBC, Reuters, Wordometers