Gold Steady As Vaccine Doubts, Stimulus Bets Offset Strong Equities
Gold held steady on Wednesday, as concerns over the global rollout of a potential COVID19 vaccine and bets for further stimulus to ease the pandemic's blow offset strong appetite for riskier assets and a firm dollar.
- Last Updated: November 11, 2020, 16:39 IST
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Gold held steady on Wednesday, as concerns over the global roll-out of a potential COVID-19 vaccine and bets for further stimulus to ease the pandemic’s blow offset strong appetite for riskier assets and a firm dollar.
Spot gold was little changed at $1,875.67 per ounce by 1050 GMT, while U.S. gold futures eased 0.1% to $1,874.
Gold fell as much as 5.2% on Monday after drugmaker Pfizer said its COVID-19 vaccine was more than 90% effective based on initial trial results, with the resultant optimism continuing to fuel a strong run in equities.
But the breakthrough highlighted the logistical challenges of distributing hundreds of millions of doses once it becomes available.
The vaccine news has slightly reduced the need for stimulus but the vaccine is not yet available, said Quantitative Commodity Research analyst Peter Fertig, and with the lockdowns, especially in Europe, the government will still have to support the economy.
Further, “ultra-low” US Treasury yields– though they are edging up a little bit — and near zero-interest rates in most markets are favourable for gold, Fertig added.
Non-yielding gold has risen about 23% so far this year, supported mainly by near-zero interest rates and unprecedented global stimulus, since it’s considered a hedge against likely inflation and currency debasement.
Gold also held its own against a relatively firmer dollar.
“The overall backdrop for gold has not turned negative,” said Harshal Barot, senior research consultant for South Asia at Metals Focus.
“But since risk sentiment has improved, we’re going to see certain liquidations coming in.”
Silver was flat at $24.20 per ounce. Platinum eased 0.1% to $882.16, while palladium was up 0.3% at$2,462.20.
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