Gold Enters $1,700 Lows In 3rd Losing Week, Amid Risk-On Rampage By

© Reuters.

By Barani Krishnan – Run, gold bull, run — away from the bear that is.

The selloff in what is arguably the world’s most cherished, albeit vaunted, metal showed little signs of slowing on Friday as it fell to $1,700 territory — its foray there since June.

“Gold is really struggling to pick itself up and dust itself off after taking quite a beating in recent weeks,” said Craig Erlam, analyst at New York’s OANDA. “Gold looks vulnerable to another tumble, (as) the path of least resistance still looks to be below.”

It’s been a miserable time for anyone who’s been bullish or long gold as the yellow metal posted its third straight weekly loss, while heading for a fourth monthly drop in a row since July. While gold tanked on signs that upcoming vaccines will greatly help curb the Covid-19 pandemic in coming months, stocks and risk assets like oil have rallied instead. 

In Friday’s trade, , which reflects real-time trades in bullion, was down $21.55, or about 1.2%, at $1,787.55 by 1:00 PM ET (18:00 GMT).  Bullion earlier fell to $1,774, a level not seen since July 7.

on New York’s Comex settled the day’s trade down $23.60, or 1.3% at $1,1781.90. It earlier hit $1,770.65, a low not seen since June 22, when it sunk to an intraday bottom of $1,769.

For the week, the benchmark U.S. gold futures contract lost 4.8% — almost matching the dive from two months ago when outgoing U.S. president, Donald Trump, announced he wasn’t interested in pursuing a second fiscal stimulus package for the Covid-19. It was the first U.S. stimulus of around $3 trillion or more, issued in March, that helped gold futures hit a record high of almost $2,090 in early August.

While Trump has wavered several times on the second stimulus, his loss of the November 3 U.S. election has now made him a lame-duck leader, ushering in hope that President-Elect Joe Biden will be able to get a second fiscal package together when he’s sworn in on Jan. 20. That helped gold bulls to stay somewhat positive despite booking continued losses.

But news of Covid-19 vaccine development efforts over the past three weeks have also dealt a huge blow to those long the precious metal, as money continued to leave the safe haven for risk-on assets such as stocks and oil. Friday’s settlement in December gold, for instance, was some $300 an ounce below its August record high.

Chartists said the metal could have more to lose, based on its downside trajectory.

“On the way south next areas of interest are $1,760, the 50% Fibonacci Retracement of the March – July rally and $1,700 (June 15 lows),” chartist Guillermo Alcala said in a blog on FX Live.

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