Vaccine hope puts pressure on gold
Metal edges lower as progress in Covid-19 vaccine developments counters the concern over spiking cases in the US
Bengaluru — Gold prices inched lower on Thursday, as a firmer dollar and progress in Covid-19 vaccine developments offset the concern over spiking virus cases in the US and the hope of more stimulus.
Spot gold fell 0.21 % to $1,867.43/oz by 4.18am GMT, while US gold futures were down 0.4% at $1,866.60.
After falling for five consective sessions, the dollar index was up 0.2%, making gold expensive for holders of other currencies.
"The focus here is fiscal stimulus ... If somehow there is a sizeable stimulus package that is able to get passed, we may get gold higher, but the limiting factor would be a rise in yields," said DailyFx currency strategist Ilya Spivak. "Dollar strength is a major headwind for gold."
US president-elect Joe Biden expressed hope on Wednesday that Republicans in the Congress would be more inclined to move forward on Covid-19 relief legislation after President Donald Trump leaves office in January.
Gold, which tends to benefit from stimulus measures from central banks as it is considered a hedge against inflation and currency debasement, has gained about 23% so far in 2020. However, prices are on track for the second week of declines.
Covid-19 vaccines from Pfizer and Moderna could be ready for US authorisation and distribution within weeks, setting the stage for inoculation to begin as soon as this year, US health and human services secretary Alex Azar said on Wednesday.
"Gold has the potential to take out support $1,850-$1,860 in the coming days and once that happens we will be looking at $1,750-$1,760 next," Ilya said.
Investors are also awaiting US jobs figures due at 1.30pm GMT to discern the health of the economy. Silver fell 0.5% to $24.20/oz. Platinum eased 0.5% $938.09, while palladium was down 0.3% at $2,322.53.
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