On Thursday (November 12) intraday, the DOLLAR index slipped slightly, trading below the 93 mark; Spot gold rebounded, just above $1,870 an ounce. Optimism about the coVID-19 vaccine weighed on gold prices earlier this week, but prices have since rebounded from their lows. Analysts said risk aversion from a coVID-19 vaccine that is unlikely to be available on a large scale in the short term and the global epidemic is still worsening should support gold prices. Uncertainty over the outcome of the US election is also a big factor in gold’s favour. Investors will also be watching the dollar, which could give gold more momentum for a rebound if it fails to stay strong. On Thursday night, Hong Kong time, investors will be greeted with US inflation data, which is expected to trigger market volatility and be positive for gold if inflation shows signs of picking up.
Gold prices fell 1% Wednesday on the strength of the U.S. dollar. Spot gold closed at $1,864.45 an ounce, down $11.47, or 0.61 percent.
“There are two things working against gold right now, a strong stock market and a strong dollar,” said Bob Haberkorn, senior market strategist at RJO Futures. After the U.S. election last week, investors turned to safe-haven precious metals, but that eased with the novel Coronavirus vaccine news.”
Craig Erlam, senior market analyst at Oanda, said higher Treasury yields continued to support the dollar and weighed relatively on gold.
In The Asian session on Thursday, gold rebounded as the dollar retreated, with spot gold last rising above the $1,870 / oz mark.
Gold tried to break below $1,860.90 an ounce on Wednesday, but has so far held above that level, making the bullish case valid for some time to come, according to Economies.com. Gold’s first target will be $1901.80 an ounce, and if that level is breached, the next target will be $1,934.86.
Don’t get too optimistic about the coVID-19 vaccine
Novel Coronavirus is more than 90 percent effective against novel coronavirus, U.S. drugmaker Pfizer INC. and German partner BioNTech SE said Monday in a large-scale clinical trial.
Pfizer said Monday that preliminary data show the novel Coronavirus vaccine in testing is effective, but that it does not mean it will be available anytime soon.
Some experts say Pfizer’s vaccine also faces a number of difficulties in cold-chain storage and transportation, which could lead to a different scenario when the vaccine is actually distributed.
The European Central Bank warned on Wednesday that the coVID-19 vaccine would have no immediate impact on the economy and hinted at more stimulus.
‘While the latest vaccine news is encouraging, we are still likely to face a continuous cycle of accelerated transmission, increased containment, improved containment and relaxed containment before the majority of the population becomes immune to the virus,’ European Central Bank President Christine Lagarde said Wednesday at the ECB’s annual forum.
The world Health Organization’s chief scientist, Sumiya Swaminathan, said on November 11 local time that the epidemic would not end until global coverage of coVID-19 vaccine reached about 70 percent.
Ole Hansen, head of commodity strategy at Saxo Bank, said he was still bullish on gold in the near term because he expected it would be some time before vaccines hit the market. “The virus may be going away, but that doesn’t mean economic growth will pick up quickly,” Hansen said. A lot of damage has been done that cannot be easily repaired and will take a long time.”
World real-time statistics show that the cumulative number of confirmed cases of COVID-19 worldwide has exceeded 52.41 million, and the cumulative number of deaths has exceeded 1.288 million. The cumulative number of confirmed COVID-19 cases in the United States has exceeded 10.7 million, with more than 139,000 new cases in a single day. The cumulative number of deaths has exceeded 247,000, reaching 247,290, with more than 1,300 deaths in a single day.
The number of new cases is currently on the rise in all states. Ohio has seen an “unprecedented” increase in new crown hospitalizations. Texas became the first U.S. state to have more than one million confirmed cases. Some American experts pointed out that the worst of the epidemic in the United States is yet to come.
Analysts said any signs of inflation picking up in the United States would be positive for gold.
The monthly consumer price index (CPI), a gauge of inflation, is expected to rise 0.1 percent in the October quarter, down from 0.2 percent the previous month, according to a media survey. The core consumer price index is expected to have risen 0.2 percent in October after rising 0.2 percent in the previous month.
The survey also showed the CONSUMER price index rose 1.3 percent in October from 1.4 percent the previous month. The core consumer price index is expected to rise 1.7 percent at an annual rate in October, unchanged from the previous month.
Analysts at Saxo Bank have said that if Democratic candidate Joe Biden wins, inflation will be pushed higher and gold will follow suit.
Ubs, the leading investment bank, said gold could still rise to $2,000 an ounce in the coming months, spurred by fresh US aid and expectations of higher inflation.
“If inflation expectations rise as a result of the increased economic activity associated with vaccines, that should depress the long-term performance of U.S. real yields and become a supportive factor for gold,” said Lachlan Shaw, head of commodity research at National Australia Bank.
Gold tends to benefit from a broad-based stimulus because it is seen as a hedge against inflation and currency depreciation.