Gold Plunges Close to Four-Month Low Near $1800 Ahead of Fed Minutes

On Wednesday, the prices of gold dropped close to its lowest level since July 17 as President-elect Joe Biden started the formal transition to the White House. Also, the expected availability of COVID-19 vaccines in the next few months boosted risk appetites and lowered the demand for the bullion. But the losses of the yellow metal were capped by a weaker dollar that made the bullion cheaper for investors using other currencies.

Spot gold is currently trading at $1,806.15 per ounce as of 0729 GMT.

National Australia Bank’s head of commodity research Lachlan Shaw noted a shift in the gold markets towards a new phase due to the development of COVID-19 vaccines. A sustainable rally towards the $1,900-$2,000 level is not likely if real long yields in the U.S. continue to trade at current levels, he added.

Last Monday, President Donald Trump approved the formal start of Biden’s transition process. He authorized the General Services Administration to provide federal funds to Biden’s transition team and the Office of the Director of National Intelligence to give Biden the classified presidential daily briefing (PBD). The PBD is a statutory requirement and considered a rite of passage for U.S. presidents-elect.

In physical trading, data from the Hongkong Census and Statistics Department showed that China’s net gold imports in October plunged by around 84% from the six-month high in September. It is the largest month-on-month decline in four months.

On the technical front, ED&F Man Capital Markets’ analyst Edward Meir predicted that a slide below $1,800 could result in more gold selling. But he expects the bullion to find support at the $1,750-$1,770 level. He also anticipates investors’ move towards risk assets.

In a related development, the holdings in the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, fell 1.1% from 1,213.17 tons on Monday to 1,199.74 yesterday.

Meanwhile, the markets are now waiting for the release of the minutes of the U.S. Federal Open Market Committee’s November 4-5 policy meeting, which is due today at 1900 GMT. Investors are also monitoring the release of other U.S. economic data due today, including weekly initial jobless claims, new home sales and durable goods orders for October and consumer spending in November