Last Updated : Nov 18, 2020 10:49 AM IST | Source: Reuters

Gold inches lower as COVID-19 vaccine optimism weighs on appeal

Spot gold fell 0.1% to $1,877.39 per ounce by 0344 GMT, while U.S. gold futures were down 0.5% at $1,875.30.

Reuters

Gold prices edged lower on Wednesday due to optimism over a potential COVID-19 vaccine, but concerns over the economic impact from the resurgence of coronavirus cases in the United States limited their decline.

Spot gold fell 0.1% to $1,877.39 per ounce by 0344 GMT, while U.S. gold futures were down 0.5% at $1,875.30.

Gold shed as much as 1.3% on Monday after Moderna said its vaccine was 94.5% effective in preventing COVID-19 in a late-stage trial.

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"There is a lack of catalyst for gold prices to rally ... Weighing on prices is a slight depressing of inflation expectations because it's quite clear now that the U.S. fiscal stimulus will probably not be as sizeable as previously imagined," said IG Markets analyst Kyle Rodda.

COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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The emphasis is now on the Federal Reserve to support the U.S. economy through the surge in coronavirus, he added.

Fed chair Jerome Powell said on Tuesday there is "a long way to go" for the economy to recover and that the central bank is committed to using all its tools to support the recovery for as long as required.

Highlighting the grim affect of the pandemic, data showed U.S. retail sales rose less than expected in October and could slow down further amid declining household income as millions of unemployed Americans lose government financial support.

Gold, considered a hedge against inflation and currency debasement, has gained over 24% this year, mainly benefiting from massive global stimulus.

A weak dollar, intensifying pandemic and expectations of fresh U.S. stimulus may restrict major downside in gold, said Hareesh V., head of commodity research at Geojit Financial Services.

However, a break of stiff support at $1,840 could take gold prices lower to $1780-$1,750 or more, he added.

Silver fell 0.2% to $24.41 per ounce. Platinum was down 0.1% at $924.08, while palladium eased 0.2% to $2,312.53.
First Published on Nov 18, 2020 10:46 am

tags #Commodities #coronavirus #Covid-19 #Gold