The prices of gold pushed lower in European trading on Wednesday as the the greenback recovered nearly half a percent against a basket of rival currencies. The bullion fell under pressure earlier this week after positive news on drugmaker Pfizer’s COVID-19 vaccine trial but has been underpinned since as concerns over the logistical challenges in the production of a potential vaccine and the distribution of hundreds of millions of doses when it becomes available have surfaced.
Spot gold prices dropped by 4.6% on Monday, its highest daily decline in almost three months. It is currently trading at $1,863.07 per ounce going into the European close.
Pfizer and its partner BioNTech reported on Monday that their experimental vaccine is more than 90% successful in preventing COVID-19. The result was based on an interim analysis of data that included more than 43,000 participants, 42% of whom are from diverse backgrounds. It is the first COVID-19 vaccine in development that exceeded the Food and Drug Administration’s (FDA) required minimum effectiveness of 50%.
Consultancy and advisory firm AirGuide’s executive director Michael Langford said he was not convinced about the initial vaccine being proposed. He stressed that the coronavirus remains a problem and governments are likely to roll out fiscal stimulus to boost economic recovery. It will be supportive of gold but negative for the U.S. dollar.
ANZ analysts added that investors were convinced that concerns about the actual effectiveness of the vaccine and issues about production and distribution would prompt governments and central banks to keep accommodative monetary and fiscal policies.
Still on COVID-19, the resurgence of new infections forced California and several other states across the Midwest to impose tighter restrictions to control the spread of the coronavirus. In Japan, Prime Minister Yoshihide Suga instructed Cabinet members to draft a third supplementary budget this year to provide a stimulus package to improve economic growth, both on microeconomic and macroeconomic levels.
Meanwhile, both job openings and hiring in the U.S. declined in September that indicates a slowdown in labor market recovery even before the resurgence of new coronavirus cases. Federal Reserve policymakers commented that more government aid was needed to ensure steady economic growth in the coming months.