Gold Dives Below Key $1,800 Threshold In Technical Sell-off
Gold slumped 2% to a near 5month low on Friday, breaking below a key technical level of $1,800 an ounce, as investors dumped the metal on hopes of a virus vaccine and a smooth transition in the U.S. presidency.
- Last Updated: November 27, 2020, 22:06 IST
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Gold slumped 2% to a near 5-month low on Friday, breaking below a key technical level of $1,800 an ounce, as investors dumped the metal on hopes of a virus vaccine and a smooth transition in the U.S. presidency.
Spot gold slid 1.6% to $1,781.96 per ounce by 10:29 a.m EDT (1529 GMT), earlier falling to its lowest since July 6 at $1,773.10 an ounce.
The metal has shed about 4.7% so far this week, the most since the week of March 13.
U.S. gold futures slipped 1.5% to $1,779 an ounce.
“As soon as prices touched below the key $1,800 level, it triggered a sell-off. It is probable that prices might test the $1,750 level given we have a strong fundamental reason like the vaccine,” said OANDA analyst Craig Erlam.
Further weighing on gold, U.S. stock index futures edged higher on vaccine optimism and as investors bet on a calmer global trade relations under President-elect Joe Biden. [.N]
“It is believed that Biden will take a calmer approach towards trade with other countries like China and that is getting reflected in the stock market,” said Natixis analyst Bernard Dahdah.
U.S. President Donald Trump said on Thursday that if the Electoral College votes for Biden, he would leave the White House, opening way for the latter to take up the presidency.
“However, with ultra-low interest rates and prospects of more stimulus in the economy, gold looks robust in the longer term,” Dahdah said.
The economic impact of the virus pandemic has led global central banks to keep interest rates at minimum.
Along with that, massive amount stimulus into the economy has raised concerns of a higher inflation, helping gold to gain more than 17% so far this year.
In other metals, silver dropped 3.3% to $22.68 per ounce and was set to post a 6% weekly fall.
Platinum rose 0.2% to $963.67 and palladium gained 0.3% to $2,390.40.
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