Gold faces worst week in two months as vaccine optimism weighs
Gold edged down on Friday, on path for its worst weekly decline in two months, as hopes for a virus vaccine and a rebound in economic growth dulled demand for the safe-haven asset.
Spot gold fell 0.1% to $1,808.30 per ounce by 1054 GMT, down 3.4% on the week so far, it’s biggest weekly loss since September 25.
US gold futures were little changed at $1,806.40.
“A break below $1,800 an ounce could well see further losses towards $1,760 as positive sentiment around a possible vaccine continues to weigh on demand for the traditional safe haven asset,” said Michael Hewson, chief market analyst at CMC Markets UK.
The coronavirus drug by AstraZeneca was touted as a “vaccine for the world” because of its affordable cost.
However, the vaccine’s effectiveness is now under more rigorous scrutiny, which analysts claim could postpone its regulatory approval.
The dollar also weakened on improving risk aversion from Covid-19 vaccine optimism and prospects for an easier transition to a Biden administration, limiting losses in gold.
“The concern right now is that dissipated central bank buying and outflows in ETFs,” said independent analyst Ross Norman.
“Looking at gold right now, it is still bearish in the short-term and might go down further, but in the longer-term it can’t look any better given the ultra low interest rates and prospects of more stimulus in the economy.”
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 19% so far this year.
Lower interest rates reduce the opportunity cost of holding gold.
In other metals, silver fell 0.8% to $23.26 per ounce an ounce and was set to post a 3.7% weekly fall.
Platinum fell 0.3%, to $958.96 and palladium was little changed at $2,382.68.