The prices of gold declined in early trading on Monday as the possibility of a quick roll-out of the COVID-19 vaccine has kept safe-haven buyers at bay. The optimism over another U.S. fiscal stimulus and a weaker dollar failed to offer much support for the yellow metal. The dollar went down by around 0.1% against a basket of rival currencies that made the bullion less expensive for investors using other currencies.
Spot gold is currently trading at $1,866.10 per ounce as of 1038 GMT.
U.S. Treasury Secretary Steven Mnuchin ended several federal COVID-19 relief programs effective December 31. But last Friday, he reassured the markets that his agency and the Federal Reserve still have tools to support the economy. He also hinted that negotiations with Democratic legislators on stimulus measures would continue.
Meanwhile, Dr. Moncef Slaoui, chief scientific adviser for “Operation Warp Speed,” recommended starting COVID-19 inoculation within a day or two after the regulatory approval of Pfizer’s emergency-use application. He explained that around 70% of the U.S. population needs to be vaccinated to achieve herd immunity. However, President-elect Joe Biden worries about possible delays because President Donald Trump refused to share vaccine data and distribution plans. The total number of COVID-19 cases in the U.S. has passed the 2 million-mark last weekend.
Phillip Futures’ senior commodities manager Avtar Sandu predicted that the dollar would continue to remain weak and the interest rates low next in 2020, which is favorable for gold. But he expects investors not to chase higher prices and instead wait for dips opportunities. CMC Markets’ chief strategist Michael McCarthy added that a potentially stronger dollar could push gold prices down to $1,800-$1,790.
In a related development, the holdings in the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, increased by 0.24% on Friday on 1,220.17 tons. Also, the U.S. Commodity Futures Trading Commission reported that market speculators raised their bullish stance in COMEX gold contracts for the week that ended on November 17.
In physical trading, Indian gold consumers continued their festival-motivated buying spree last week. However, volume and sales were lower compared to the same period of last year, and prices were slightly lower than a week ago.