Gold prices fall by the most in 3 months amid report of effective coronavirus vaccine candidate
Gold futures on Monday were on pace for their steepest daily drop in three months, as a positive report on a vaccine candidate sent the dollar and government bond yields higher, pressuring bullion.
Pfizer and BioNTech on Monday said their COVID-19 vaccine candidate was 90% effective at preventing COVID-19, derived from the novel strain of coronavirus.
“Interestingly, gold is getting whacked in the wake of the vaccine news. U.S. rates are rising on the back of the announcement and that’s bad news for the yellow metal which has fallen as low as $1,900, having traded above $1,950 ahead of the release,” wrote Craig Erlam, senior market analyst at Oanda in a Monday note.
“Investors now clearly betting on a stronger economic recovery and everything that comes with it,” the Oanda analysts wrote.
December gold
GCZ20,
GOLD,
was trading off 63.40, or 3.3%, at $1,888.70 an ounce, after gold logged its biggest weekly gain in three months on Friday. If the metal’s decline on Monday holds it would mark its sharpest daily drop since Aug. 11, according to FactSet data.
Silver futures
SIZ20,
SI00,
meanwhile, were shedding $1.12, or 4.4%, at $24.55 an ounce, following a weekly gain of 8.5%, marking its sharpest weekly gain since Aug. 7.
The tumble in safe-haven metals come as the 10-year Treasury note yield
TMUBMUSD10Y,
was at 0.91% early Monday, compared with 0.821% on Friday. Bond prices fall as yields rise. Meanwhile, the dollar was edging up 0.1%, as gauged by the ICE U.S. Dollar Index
DXY,
Rising yields and a stronger U.S. buck can make dollar-pegged assets, like gold and silver, which don’t offer a coupon, less attractive to overseas buyer.
Promise of a vaccine for the deadly coronavirus infection has always been viewed as a bearish scenario for gold prices in the near term because it could help forge a stronger economic recovery.
