Gold Slips on COVID-19 Vaccination, Hopes for U.S. Stimulus Caps Losses


On Wednesday, the prices of gold slipped as positive developments on the COVID-19 vaccine buoyed Asian equities to record highs and sent investors towards riskier assets. But hopes for a U.S. stimulus package capped the losses and kept the yellow metal close to two-highs reached in yesterday’s session.

Spot gold is currently trading at $1,860.14 per ounce as of 0707 GMT.

The UK government started the COVID-19 vaccination yesterday. It ordered 40 million doses from Pfizer Inc. enough to immunize a third of the country’s population. In addition, the British government ordered seven million doses of vaccine from Moderna Inc., which is expected to be approved for emergency use in the next few weeks.

In the U.S., the government plans to have most Americans vaccinated by summer 2021. Warp Speed’s chief scientific Officer Moncef Slaoui said Johnson & Johnson and AstraZeneca Plc would provide 150-200 million doses in the first quarter that could immunize 110-150 million people. On top of that, the U.S. government also ordered vaccines from Pfizer Inc. and Moderna enough for around 100 million people.

Pfizer has already passed the U.S. Food and Drug Administration’s safety and efficacy evaluation of its vaccine. Company representatives will meet with the U.S. vaccine advisory panel this week. CEO Albert Boula expects the meeting to be intense but he is confident that their vaccine will be authorized given the strength of their data. Meanwhile, Johnson & Johnson announced that the late-stage trial of its single-dose vaccine can be completed in January.

On the U.S. stimulus package, Treasury Secretary Steven Mnuchin presented Democratic House Speaker Nancy Pelosi with a $916 billion economic rescue package. Legislators from both parties considered this progress in the ongoing stimulus talks because it was larger than the previous proposal of $908 billion.

Edward Meir, an analyst with ED&F Man Capital Markets, noted that despite the rollout of COVID-19 vaccines, gold retained its firepower because of the stimulus measures. AirGuide’s executive director Michael Langford agreed. He said the stimulus package would weaken the U.S. dollar and create more liquidity that will benefit the bullion. He expects gold to end the year at $1,900 per ounce.