Gold retreated from intraday highs as bears moved higher. Gold prices were pushed lower, with coVID-19 vaccines and the Fed’s outlook the most critical risk signals. Investors’ hopes for the coVID-19 vaccine were bolstered by the latest positive news from Pfizer, the US drug maker. A controversial federal Reserve governor candidate, Judy Shelton, was defeated in a crucial Procedural vote in the Senate, raising the possibility that her nomination will fall through, helping to push gold prices back down.
Gold was down 0.07 per cent at $1,878.70 at 10:01 GMT.
Fundamental Analysis: Pfizer’s vaccine trials are another shot in the head to thwart a third wave of U.S. outbreaks
Following Pfizer’s announcement last week that a vaccine developed with BioNTech, a German partner, was 90 percent effective, Moderna also had positive news this week that its vaccine is more than 94 percent effective and can be stored in refrigerators, sending STOCKS higher. Pfizer even said today (18 November) that the coVID-19 vaccine had reached a safety milestone. But the good news about vaccines is important because Bank of America’s latest report says the number of new confirmed cases in the US is rising sharply, Writes Zerohedge in a new article. According to Ethan Harris of the Bank of America, which calculates new cases, the number of new cases in America will more than double every two weeks. Even if the growth rate falls to 20%, that still means cases will double every four weeks.
Bank of America also said the government’s response to the surge in new cases was largely to step up testing for coVID-19, but cases are increasing in almost every state, with 36 reaching new highs last week. Zerohedge comments: “Remember saying earlier that the Fed would need a new crisis to double QE? Now we’ve seen what a crisis it is, especially since Pfizer and Moderna vaccines won’t be widely available to the American public until mid-2021.”
The view of many Americans is that the United States is now in the third coVID-19 wave. A record 100, 000 new cases were reported in a single day in the United States. The latest report from the US Centres for Disease Control and Prevention (CDC) also showed that the number of confirmed covid-19 cases in the US yesterday (17 November) rose from 138,02 to 151,855, with 762 deaths. FX Street reports that Pfizer still has no intention of stopping, and the company’s CEO revived investor hopes in his latest statement, saying that the company is “very close” to filing an application for an emergency license to use the coVID-19 vaccine in the United States.
Jeff Wright, deputy CHIEF executive officer of Gold Mining, expressed the view that the Gold market will continue to look weak from this weekend to Thanksgiving next week. “The softness in gold will ease after Thanksgiving, when Washington must get back to talking about stimulus in hopes of funding the government beyond December 11,” he said.
Fundamental Analysis: Fed nominators reject Gold Standard as risk signal
The U.S. Senate on Tuesday limited the nomination debate process to a vote, and the rejection means the opposition can continue to block the nomination process from going to a full vote for confirmation. US President Donald Trump’s nomination of his former economic adviser has been controversial from the start because Judy Shelton’s views on Fed independence, the gold standard and bank deposit guarantees are contrary to those of many lawmakers. In addition to opposition from Democrats, some Republican senators also voiced objections, and the final vote was defeated 47-50, which means the nomination is likely to fall apart.
Analysts at Standard Chartered Bank believe the Fed will likely see the need to ease rates in the coming weeks, even before the Federal Open Market Committee in December. The results of two special elections in January will determine who wins the Senate, so if Democratic Presidential candidate Joe Biden cannot win both seats, the Republicans will continue to hold the majority and can only hope to push through a small part of the economic package.
Us retail sales rose just 0.3 per cent in October from a month earlier, data showed on Tuesday. ANZ Bank analysts explained: “The figure was below expectations and down from 1.6 per cent in September. Sales of cars and gasoline were weak, and sales of furniture, food and beverages, and clothing were down. Excluding autos, retail inventories rose 1.1 per cent. Overall, this is a clear indication that consumers are tightening their seat belts and that the US economy will benefit from the fiscal stimulus.”
The 50-day average is near $1,898.50, limiting near-term upside for gold, but bears will remain cautious unless they break significantly below the September low of $1,848.82.