By Barani Krishnan
Investing.com – It’s hard for the gold bull to catch a real break.
The yellow metal was in the red again Wednesday, less than 24 hours after clawing back some losses from Monday’s epic shakedown.
New York-traded settled down $14.80, or 0.8%, at $1,861.40 an ounce.
The U.S. gold futures benchmark rose 1.2% in the previous session, finding shelter at just under $1,880, after Monday’s 4.5% collapse that took it to a four-month low of $1,848.
, which reflects real-time trades in bullion, was down $12.53, or 0.7%, to $1,864.89 by 1:55 PM ET (18:55 GMT).
Gold’s decline came as Wall Street was back to recycling risk on Wednesday, driving industrial stocks lower and big tech names higher.
The rotation, the second time in a week, came after it dawned upon the equities crowd that Pfizer’s Covid-19 vaccine breakthrough reported Monday was probably overhyped in its messaging that there would be enough doses available in short order to get people back to normal life and work quickly — thus reducing the need for stay-home services like Zoom’s video-conferencing and Amazon’s home deliveries that fueled a boom for tech stocks.
The also rose with that Wednesday’s realignment in risk, delivering a fresh knock on nemesis gold.
Pfizer’s vaccine news also sent to their highest this week since the pandemic began, further pressuring gold. ”The rise in yields has been accompanied by strengthening in equities and tighter credit spreads, keeping financial conditions uber-loose, which raises questions as to why the Fed should intervene,”
Fed intervention is probably the only thing capable of driving gold higher in the near-term as U.S. President-Elect Joe Biden and his Democratic government-in-transition encounter pushback from rival Republicans in the Senate on the issue of any Covid-19 related stimulus.
Incumbent President Donald Trump has also refused to concede to Biden after losing last week’s U.S. election, further complicating any bipartisan efforts for a stimulus that would help lift gold prices.
“I continue to think the longer term prospects for gold are bullish, (as) the road to recovery will take time and require more central bank and government support,” said Craig Erlam at brokerage OANDA. “But given the reaction we’ve seen to vaccine news in recent days, the immediate downside risks for gold have undoubtedly increased.” TD Securities said in a note.
“The key area of support remains $1,850-$1,860 and it’s looking very vulnerable in the near-term. More vaccine good news in the coming weeks is a big threat to that level.”
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by : Investing.com