International spot gold rebounded moderately on Tuesday (November 10), hitting an intraday high of US $1,890.29 / oz. The positive news on vaccines had a big impact on the market, but the current market sentiment is overheated, and confirmed cases of COVID-19 are expected to keep rising globally at least until mass vaccination of COVID-19 vaccine. As Pfizer expects the vaccine to be phased out until 2021, uncertainty and political risk will continue to provide solid safe-haven support for gold.
Meanwhile, the market remains focused on the election and the impact of the fiscal stimulus bill on gold prices. If there is further clarity on the election impasse, hopes for a fiscal stimulus will rise further, giving a boost to gold as a hedge against inflation. But it is also important to note that the economic recovery is clearly under way, and if it drags on for too long, the strength of the fiscal stimulus will be tested, potentially limiting gold’s upside.
Already, analysts see the novel Coronavirus vaccine as an obvious breakthrough that undermines the chances of another massive fiscal stimulus bill, but investors say there is still a need to rescue struggling companies and build a bridge to the economy.
“In general, you have to assume that the stimulus is likely to be smaller than expected because policy makers will say the economy will turn around,” said Jonathan Golub, chief U.S. equity strategist at Credit Suisse.
In spite of this, BK Asset Management managing director and co-founder, said Boris Schlossberg, days despite biden fundamentally ignored the trump is considered to be completely unfounded, but due to trump appointed nominee from the GSA office refused to release biden team for the key transitional capital and security checks, now logistics conflict is brewing. Such moves would not only impede a smooth transition of power but also endanger national security and, with confrontation turning to legal means, markets could quickly take a risk if, for the first time in history, the US fails to resolve the transition peacefully.
On a technical level, daily charts showed gold falling back into the triangle it broke last week, with a false breakout turning bullish. Short-term focus on 1850-1860 regional support, which has been a key support platform since August to limit gold’s decline, could open the door to 1800 if it effectively breaks below this support area. And if the stability of 1850-1860 regional rebound, the key resistance to the upside around 1900, effective break is expected to restore the bullish outlook.
Robin Bhar, an analyst, noted that while the new news is negative for gold, uncertainty about the vaccine remains high and investors may want to wait for more certain news before making big decisions. “When the dust settles, I would buy gold on the dips. It will be a long time before the vaccine is actually available to the general public, and when it is available to everyone, it may be time to sell gold.”
Lachlan Shaw, head of commodity research at National Australia Bank, said major central Banks were unlikely to change their easing stance in the short to medium term as it takes time for vaccine development and economic growth to pick up. “If inflation expectations rise because of vaccine-driven economic activity, that will depress long-term real US yields and be a supportive force for gold.”