In European trading on Thursday, optimism about the coVID-19 vaccine cooled to focus on the more severe situation ahead of the onset of winter. With the market now on the defensive, physical gold has resumed its rally as a safe haven, trading around $1,870 but still unable to repair the damage from Monday’s $100 plunge.
The second wave of coVID-19 is on the rise. Japan reported a record number of new cases in a single day, while the number of new cases in the United States continued to rise to more than 100, 000 as investors scaled back their optimism about the new coVID-19 vaccine given that it is unlikely to avoid the winter gloom in Europe and the United States.
Pfizer has teamed up with German biotech firm BioNTech to develop a novel coronavirus mRNA vaccine that blocks 90 percent of infections, the company said On Tuesday. The news boosted risk sentiment and gold sold off overnight, plunging more than $100 at one point before plunging from above 1960 to around 1850.
But as markets digested the news over the next two days, risk sentiment continued to cool amid more practical issues such as transport and distribution, as well as a barrage of worsening news, giving gold a respite from the slump.
In European markets on Thursday, spot gold continued its narrow trading range of the previous two days and was trading around $1,870, with the 1900 level once again a key psychological barrier.
Hopes of a successful vaccine have boosted the market’s appetite for risk, but analysts said it could take a long time for the vaccine to become available to the general public.
“The [vaccine] news is definitely positive, but we certainly need to dig into the details and consider the implications of the whole process,” said Jeremy Stretch, head of fx strategy at CIBC Capital Markets G10. “We need to remember that this is an uncertified vaccine.”
Yan Yang, market analyst at CMC Markets, said: “Gold traders are trying to find a balance between positive vaccine news and the rise in global coVID-19 cases.” While vaccines could influence the medium – to long-term trend in gold prices, monetary and fiscal stimulus was needed to support the global economy in the near term, she said.
Covid-19 in Japan: According to NHK TV, 1634 new cases of COVID-19 were confirmed in Japan that day, the largest increase. That’s more than the record 1, 605 new cases a day on Aug. 7. There were more than 12,000 active cases nationwide, the highest since August 25, peaking on August 13 (just above 16,000). According to some Japanese media, the number of new cases in Tokyo, Osaka and other places hit a new high in a single day, and the epidemic situation is grim.
While the current situation is unlikely to call for tougher action from the Japanese government, if the virus continues to spread along this trend in the coming weeks, it could have an impact on consumer behavior.
The Outbreak in Europe: New confirmed cases in the UK, Germany and France have been flat or falling in the past week. Smaller countries that have been hit harder, such as Belgium, the Netherlands and the Czech Republic, have all recorded big drops in new confirmed cases in a single day. Many countries have imposed new restrictions, including the closure of non-essential shops, bars and restaurants, to slow the spread of the pandemic.
Us epidemic: The number of new cases in the US has now exceeded 100,000 for seven consecutive days. In the past few weeks, Missouri and dozens of other U.S. states have seen a surge in cases.
According to a study by Bloomberg Economic Research and Harvard University Opportunity Insights, the U.S. economy is already slowing again because of the new wave of the epidemic.
Vaccine news: According to an update, US vaccine manufacturer Moderna says it expects to start evaluating phase III vaccine trial data within “a week” and may apply for emergency use authorization in early December.
Speaking at the Financial Times Live Global Pharmaceutical Summit on Thursday, Dr Fauci was optimistic about the latest advances in Moderna vaccines. ‘We may see Moderna catch up with Pfizer soon,’ he said. “We are told that in the next few days to a week, they will be looking at the data as Pfizer did a week ago.”
He added that he would be surprised “if we don’t see a similar effect” to Pfizer’s results on Monday, because the vaccine is “the same in many ways.”
He warned that the world was still “very far from victory” and said global co-operation was needed to “strengthen our efforts to contain the outbreak” and “strengthen public health measures”. He added that COVID-19 is likely to continue as an endemic epidemic in the coming years, with widespread local transmission.
Jeffrey Halley, the senior market analyst at OANDA, said: “Support and resistance are currently at $1850.00 and $1880.00 respectively. A further fall to $1800.00 is still the most likely outcome.