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Joe Biden transition, vaccine hopes keep gold near four-month low

Spot gold eased 0.2% to $1,803.51 per ounce by 0327 GMT. On Tuesday, it had hit its lowest level since July 17 at $1,800.01.

November 25, 2020 / 10:20 AM IST

Gold languished near a four-month low on Wednesday as appetite for riskier assets remained buoyed by the formal start of U.S. President-elect Joe Biden's transition to the White House and hopes a COVID-19 vaccine would be ready soon.

Spot gold eased 0.2% to $1,803.51 per ounce by 0327 GMT. On Tuesday, it had hit its lowest level since July 17 at $1,800.01.

U.S. gold futures dipped 0.1% to $1,803.20.

"We are moving into a new phase in gold as vaccine developments are changing the regime of pandemic-caused disruptions and headwinds to growth that gold markets were pricing in," said Lachlan Shaw, National Australia Bank's head of commodity research.

"If U.S. real long yields range trade around current levels, it's difficult to see gold breaking out and then sustaining a strong rally towards $1,900 and $2,000."

COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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U.S. President Donald Trump gave the go-ahead for Biden to start receiving daily intelligence briefings, a sign he has all but accepted the election result, after Pennsylvania certified Biden's victory in the battleground state.

The formal start of Biden's transition to the White House and positive developments around a possible COVID-19 vaccine helped world shares scale a record peak, after an overnight surge saw the Dow crack 30,000 for the first time.

A break below $1,800 could see more selling of gold and this move away from gold and towards risk assets could continue, said ED&F Man Capital Markets analyst Edward Meir, adding the metal should find some support near $1,750-$1,770.

Investors are now waiting for the release of minutes from the U.S. Federal Reserve's last meeting due at 1900 GMT.

On the physical front, data on Tuesday showed China's net gold imports via Hong Kong recorded its steepest monthly contraction since June in October.

Silver eased 0.2% to $23.20 per ounce. Platinum fell 0.3% to $958.32 and palladium was down 0.7% at $2,332.01.

first published: Nov 25, 2020 10:09 am