Gold Plunges 5% As Stocks Soar On COVID-19 Vaccine Euphoria
Spot gold was down 5.1% at $1,852.82 per ounce by 11:07 a.m. EDT (1607 GMT), while U.S. gold futures slid 4.9% to $1,855.30.
Spot prices beat a sharp retreat from a near two-month peak of $1,965.33 hit earlier in the session amid a weaker dollar and hopes for more stimulus following Joe Biden’s victory in the U.S. elections.
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.[.N]
“(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 24% 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.”
Other precious metals also sold off, with silver sliding 6.7% to $23.87 per ounce, platinum falling 3.9% to $854.50 and palladium shedding 0.8% to $2,471.32.
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