Gold slid to a four-month low on Tuesday, extending a sharp slide from the previous session as optimism over the development of COVID-19 vaccines drove investors to riskier assets.
Spot gold dropped 1.3% to $1,812.81 an ounce by 1218 GMT, having touched its lowest since July 17 at $1,804.70, while U.S. gold futures lost 1.5% to $1,810.60.
European equities rose on a possible easing of COVID-19 curbs and progress on vaccines from the likes of AstraZeneca , Pfizer and Moderna . The European Union has reached a deal with U.S. biotech company Moderna for supply of its vaccine, an EU official told Reuters on Tuesday.
“We had news about the vaccine, saw yields moving higher in U.S.; even the dollar went lower and gold is not profiting from that … This is a very bad sign for gold and means there is underlying weakness building up,” said ABN Amro analyst Georgette Boele. A break below support at $1,800 would trigger further price declines, Boele added.
The dollar held close to its lowest in nearly three months, potentially making gold cheaper for buyers with other currencies. Equities markets were also supported by clearance for U.S. President-elect Joe Biden‘s transition to the White House, even though President Donald Trump stopped short of conceding defeat in the Nov. 3 election.
“The acknowledgement of Biden’s victory from the Republicans is likely to reduce the risk of further tensions and represents a supportive element for stocks, while haven assets such as gold are suffering,” ActivTrades’ chief analyst Carlo Alberto De Casa said in a note. However, central banks will still be forced to print a huge amount of money, which could revive investor interest in gold before long, De Casa added.
Gold is considered a hedge against inflation and currency debasement that is likely to result from unprecedented global stimulus to fight the economic impact of the COVID-19 pandemic. In other precious metals, silver dipped 1.4% to $23.25 an ounce, platinum was flat at $925.87 and palladium dropped 1.4% to $2,323.13.