Spot gold was hit hard again in the Asian session on Wednesday, at one point dropping more than $60 to near 1872, while silver plunged more than 5%. Prices are now recovering.
Yesterday, gold plunged more than $110, the second biggest drop on record, and fell to the 1900 mark from around the day’s high of $2,030. Silver plunged 14.89%, the seventh steepest drop in history.
Now, positive news on coVID-19 vaccine development has added to the decline.
Russia has become the first country in the world to approve a vaccine for COVID-19 after less than two months of human trials, President Vladimir Putin said on Tuesday.
The Russian Health Minister said that the first registered novel Coronavirus vaccine was named “SPUTNIK V”, and pointed out that inoculation with the novel Coronavirus vaccine can develop long-term immunity and immunity can last for two years, SPUTNIK News agency reported Wednesday.
On the vaccine front in the US, President Trump said on Tuesday that 600 million doses of the Novel Coronavirus vaccine are planned in the US once clinical trials are completed and the vaccine is approved.
“I am pleased to announce today that we have reached an agreement with Moderna to produce and market 100 million doses of COVID-19 vaccine,” he said at a press conference. The federal government buys these vaccines.” He stressed that the new agreement did not cancel previous agreements with Sanofi, GlaxosmithKline and Johnson & Johnson.
Trump noted that all three novel Coronavirus vaccine candidates are in final phase III clinical trials. “We are moving quickly toward FDA approval. Once approved, we are on the way to rapidly producing 100 million doses of vaccine, and up to 500 million more after that, which means we will have 600 million doses.”
Mr Trump had earlier said a US VACCINE for COVID-19 could be ready by the presidential election on 3 November.
Meanwhile, a fresh round of STIMULUS in the U.S. remains stalled, which is also a big negative for gold bulls.
Senate Majority Leader Mitch McConnell said Tuesday that White House negotiators had not met with Congressional Democratic leaders that day to discuss a new rescue package. House Speaker Nancy Pelosi also told reporters in the afternoon that she has not had any contact with White House negotiators.
In addition, rising YIELDS on U.S. treasuries have made unyielding gold less attractive. U.S. Treasury yields jumped to one-month highs on Tuesday as stocks neared record highs, reducing demand for safe-haven Government debt.
As for the outlook for gold, Economists at Citi have said they continue to favour higher prices. While it’s hard to say whether gold will eventually hit the $3,000 mark, there’s no doubt it could hit $2,100 an ounce this quarter and $2,300 in the next six to 12 months, with the broader gold market more tilted to the upside.
Carsten Fritsch, analyst at Commerzbank, said: “The rise in gold prices is almost entirely due to strong investor demand, with almost all other elements of demand playing little role. It is understandable that investors now seem to be taking profits.”
The analyst said a very pronounced pullback, such as that seen in mid-March, was unlikely. Above all, gold and silver prices have not reached the end of the road, adding that gold prices would resume their upward trend after further falls. There is room for gold to fall to $1848, its five-month uptrend line.
“However, the long-term outlook for gold and silver remains positive,” he wrote. Once the current adjustment is over, prices could start rising again.”
On the daily chart, the DOLLAR index.DXY was trading around 93.70 after three days of gains as it tried to climb further. The daily MACD red momentum column is gradually expanding and the KDJ random index continues to rebound above the 50 level, indicating strengthening dollar bullish momentum or further gains.
In the 4-hour chart, the U.S. dollar index.DXY continued to climb from a low of 92.50, briefly breaking its 100-session moving average, and was watching to see if the previous high of 94 could be broken. The MACD red momentum column held steady, and the KDJ random index edged up to the overbought level, indicating that the dollar’s rally remains firm and has room for upside.
On daily charts, gold came under further pressure after yesterday’s collapse above $100, falling as far as 1870 on the day, while support remained below its 50-day moving average. The daily chart MACD green momentum column expanded sharply, with the KDJ random index sharply turning down below 50, indicating that gold bearish momentum strengthened or fell further.
In the 4-hour chart, gold’s slide from a high of $2074 has intensified and it has now broken through multiple moving averages, pushing its last line of defense, the 200-day moving average at $1,872. The MACD green momentum column expanded sharply and the KDJ random indicator continued to hit the oversold level, indicating that short term bearish pressure on gold is not abating, but oversold may bring stabilization.
On daily charts, silver came under further pressure after falling nearly 15 percent yesterday and is now below its 20-day daily average support, with an eye on whether it can hold on to the 24-point close. The daily MACD green momentum column showed initial signs, with KDJ stochastic descending sharply from the overbought level, indicating that bearish momentum for silver was gaining momentum or falling further.
In the 4-hour chart, silver has made a sharp and deep correction after hitting a high of $29.86 and is now below its 100-session average. The MACD green momentum column expanded sharply, with the KDJ stochastic hitting oversold levels below, indicating that silver’s short-term decline will not be reversed.
Fundamentals positive factors:
- Tensions between China and the United States have increased. On Monday, China announced sanctions against 11 U.S. politicians and human rights activists, including Senator Marco Rubio, in retaliation for U.S. sanctions imposed last week on 11 Chinese officials in Hong Kong and mainland China.
- U.S. Treasury Secretary Steven Mnuchin announced Aug. 10 that companies from China and other countries that don’t follow accounting rules will be delisted from U.S. stock exchanges by the end of 2021.
- The United Nations Security Council is preparing to vote this week on a U.S. proposal to extend an arms embargo on Iran. Some diplomats say the move is doomed to failure and further endangers the fate of the nuclear deal between Iran and world powers.
- On the afternoon of August 10, local time, Trump abruptly interrupted a briefing on the epidemic. Minutes later, Trump returned to the news room and said there had been shots fired outside the White House.
Fundamentals negative factors:
- Russian President Vladimir Putin announced Tuesday that Russia has become the first country to register a vaccine against a novel Coronavirus that caused the outbreak, an announcement that drew criticism from medical experts.
- President Trump announced Tuesday that the U.S. government will buy 100 million doses of Moderna’s experimental coronavirus vaccine. The vaccine is currently in the later stages of human trials. “We are investing in the development and production of six vaccine candidates to ensure rapid delivery,” Trump said at a news conference. The military is ready to provide the vaccine to Americans as soon as it is fully approved by the FDA, and we are very close to that.”
- U.S. Senate Republican Leader Mitch McConnell said White House negotiators had not discussed a new outbreak aid package with Congressional Democrats on Tuesday.
- The BRICS Summit and the SCO Summit were originally scheduled to be held in St. Petersburg, Russia, in July this year. But the meeting was postponed because of the COVID-19 outbreak. Moscow is now planning to hold the meeting in October. Print media, according to the analysis of Indian foreign minister s jaishankar may next month on a visit to Russia, and attend the foreign ministers’ meeting of the bric countries. Chinese Foreign Minister Wang Yi will also attend the meeting, which may provide an opportunity for the Russian and Indian foreign ministers to meet separately to cool down the tension between China and India.