Gold dips as fears over new virus strain lifts dollar
· Gold prices fell on Tuesday as the dollar benefited from safe-haven buying driven by fears over a new coronavirus variant in the United Kingdom.
Spot gold fell 0.7% to $1,862.55 per ounce, while U.S. gold futures settled down 0.7% at $1,870.30.
· “Dollar strength has capped some of gold’s upward momentum,” Standard Chartered Analyst Suki Cooper said.
Making gold more expensive for holders of other currencies, the dollar gained as investors trimmed exposure to riskier currencies like that of the United Kingdom, which is facing a new variant of the coronavirus.
Meanwhile, data on Tuesday showed the U.S. economy grew at a record pace in the third quarter. Bullion hit a six-week high of $1,906.46 on Monday, mainly supported as U.S. Congress approved a $892 billion coronavirus aid package to support the pandemic-ravaged economy.
“Price risks are skewed to the upside for gold as we enter 2021, given our expectations for the dollar to weaken and monetary policy to remain accommodative, but year-end profit-taking may cap the gains in the near term.” Cooper added.
· Gold, considered a hedge against inflation, has still risen more than 23% this year amid the massive stimulus unleashed globally.
· “If the new strain does make its way into the U.S. and does reinfect people, that could really cause some additional economic damage and that could be kind of the next tailwind for gold,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
· In other metals, silver fell 3% to $25.41 an ounce, distancing itself from a more than three-month peak hit in the previous session.
· Platinum was down 0.6% at $1,002.62 and palladium rose 0.3% to $2,315.32.
CORONAVIRUS UPDATES:
Global Cases: 78.32M (+578,728)
Global Deaths: 1.72M (+12,725)
U.S. Cases: 18.65M (+173,444)
U.S. Deaths: 330,384 (+2,936)
U.K. Cases: 2.11M (+36,804)
U.K. Deaths: 68,307 (+691)
TH Cases: 5,716 (+427)
TH Deaths: 60
Myanmar Cases: 117,946 (+964)
Myanmar Deaths: 2,484 (+19)
· New Covid strain leaves UK isolated, with 1,500 trucks stranded at border
French and British officials are working to lift a ban on freight movement imposed by France amid continent-wide fear over a new coronavirus strain identified in the U.K.
France activated the 48-hour border closure on Monday, and by Tuesday morning 1,500 trucks were stuck in Kent, unable to leave the U.K, British Home Secretary Priti Patel said Tuesday.
More than 40 countries have now suspended transport links with the U.K. after a variation of the coronavirus — which health officials say could be up to 70% more transmissible — was found to be sweeping the country.
Prime Minister Boris Johnson has effectively cancelled Christmas plans for much of the country and put some 17 million people under strict lockdown rules. The coronavirus has already killed more than 67,000 in the U.K.
Efforts between the U.K. and France “to find a resolution” to the freight disruption are underway, Patel told the BBC on Tuesday morning.
· Biden says he will push for more Covid stimulus checks
President-elect Joe Biden told reporters that his Covid-19 economic relief plan will include a proposal for more direct payments to Americans.
· Current Covid-19 vaccines should be ‘adequate’ against the new virus strain, says genetics expert
Immunity duration from currently-approved coronavirus vaccines is still unknown, but the vaccines themselves should protect from the new Covid strain found in the U.K., UCL Genetics Institute Director Francois Balloux told CNBC.
· Some NYSE trading floor personnel to return to remote operations
· Biden warns Covid vaccine won’t stop deaths of ‘tens of thousands’ Americans in the months to come
· Trump calls Covid relief bill unsuitable and demands Congress add bigger stimulus payments
Trump also suggested that his administration might be the “next administration,” despite his loss to President-elect Joe Biden. The relief legislation passed by Congress Monday was negotiated in part by a senior Trump administration official, Treasury Secretary Steven Mnuchin.
· UK economy grew by record 16% in third quarter after first lockdown slump
Britain’s economic recovery from its coronavirus crash was a bit quicker than previously thought in the July-September period, according to official data which also showed government borrowing soaring to pay for the coronavirus crisis.
Gross domestic product grew by a record 16.0% in the third quarter - revised up from a previous estimate of 15.5% - but that still did not make up for its 18.8% slump in the April-June period when much of the economy was shut down.
The Office for National Statistics also said Britain borrowed a record 241 billion pounds ($323 billion) in the first eight months of the financial year, nearly 190 billion pounds more than in the same period a year earlier.
The country’s budget forecasters think the deficit will hit almost 400 billion pounds in the 2020/21 year, close to 20% of GDP or double the hit from the global financial crisis.
Public debt stood at almost 2.1 trillion pounds or 99.5% of annual economic output, the highest debt-to-GDP ratio since 1962, the ONS said.
Finance minister Rishi Sunak reiterated his pledge to tackle the huge shortfall, but not immediately.
Reference: CNBC, Reuters, Worldometers, BBC
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