Most European stocks rebounded higher as risk sentiment remained high as Europe entered trading on Thursday. In the strong momentum of risk, spot gold is obviously unstable trend, continued to fall under pressure below the 1830 barrier. The latest news that Pfizer’s vaccine is on track to receive FDA emergency authorization, while the global gold ETF recorded its second largest monthly net outflow in history in November, dealt a blow to bulls.
Gold prices fell as low as $1,828 in Europe after falling more than $30 to $1,850 yesterday, a technical blow.
Gold hit a high of $1,875 this week, trying but failing to hold on to the November 50.0 retracement range of $1,865.20. Prices then reversed course, with short-sellers continuing to compete for key short-term levels as they entered the second half of the week.
Gold’s fall yesterday tested its 200h moving average (blue), but bulls held on to this level and are now again close to testing it. The current estimate of $1,830.85 will be a key near-term level for the day ahead. Hold above this level and the short term bias will be more neutral, but lose this level and the short term bias will be more bearish.
While gold has generally benefited from the dollar’s decline, the recent market respite of the past two days has not been good for gold.
There could be some volatility towards the end of the year, but the European Central Bank and Us Federal Reserve are still easing monetary policy, not to mention US stimulus measures, which could boost gold prices in the next week or so. Then there are seasonal factors.
But one cannot simply ignore price movements. A break below the recent key level would open the way to some support below $1,823, but $1,800 would again be a key psychological support level to watch.
As for market sentiment, some analysts say the November rally was a bit too short-lived. A more dramatic correction is expected, approaching $1,720 – $50, but bargain-hunters quickly entered the market.
Analysts say that while there are good reasons for gold’s long-term outlook, there may still be some room for a near-term pullback, especially if other asset classes see year-end positioning in the coming weeks. In any case, a larger pullback will continue to provide another opportunity to buy on dips, but that depends on how you choose your level of risk appetite.
In the short term, the vaccine news, the stimulus package and changes in ETF holdings have all had an impact on gold.
Vaccine news: Pfizer’s vaccine is expected to receive FDA emergency authorization for use. Once a Pfizer vaccine is recommended and meets all necessary criteria, the following procedure should be formal.
The FDA’s independent advisory committee will hold a public meeting Thursday on Pfizer’s request for emergency licensing of the vaccine. The report raised expectations for the vaccine’s approval. The United States, however, may not start vaccinating people until four days after the vaccine is approved, rather than one or two days as previously expected.
According to the FDA, Pfizer’s vaccine is 95 percent effective in preventing COVID-19 and is effective in preventing COVID-19 in people of all ages, genders, races, and with underlying health conditions. The subjects also had no serious safety problems for two months after the second dose.
“Our team has completed a preliminary analysis, and we do believe that the criteria for success have been met,” FDA Commissioner Dr. Stephen Hahn said this week.
If, after UK approval, the Vaccines and Related Biological Products Advisory Committee (VRBPAC) convened by THE FDA refused to accept Pfizer’s vaccine, it would be highly controversial — for better or worse. If that happens, it would be a big blow to risk sentiment.
In any case, while the approval is already priced in, it’s important to note that the headlines could still provide a small boost to risk markets later today.
Us stimulus: As republicans and Democrats continued to negotiate a new rescue package, Mitch McConnell, the Republican Senate leader, criticised Democrats for refusing to co-operate and leaving people without help in time.
Nancy Pelosi, the Democratic Speaker of the House of Representatives, and Chuck Schumer, the Senate minority leader, on Tuesday rejected Controversial elements of Mr McConnell’s new bail-out bill that did not include exemptions for business and aid to local governments. They also disagreed with Treasury Secretary Steven Mnuchin’s subsequent proposal for a $916 billion bailout, saying it did not include additional unemployment benefits. Democrats still support a $980bn rescue package proposed by moderates from both parties, but there is no agreement on exemptions for business or aid for local governments.
“We’ve been in a big tug of war between the vaccine and the news, and the vaccine news has won,” said Art Hogan, chief market strategist at National Securities. He added: “The deciding factor in this tug of war is certainly the possibility of stimulus before Congress goes home for the holidays.”
Gold ETF holdings: Global ETF holdings fell in November for the first time in a year and recorded the second highest monthly net outflow on record, according to data released by the World Gold Council on Wednesday.
Gold fell for the month and recorded its worst monthly performance in four years as positive momentum in global equity markets and rising investor risk appetite made the metal less attractive. At the same time, but positions in the options market have increased. Global ETF holdings fell 107 tonnes ($6.8bn) last month, but net inflows of 916 tonnes ($50.3bn) in the first 11 months of the year were still far higher than any previous year’s annual record.