The surge in Covid-19 cases support gold prices
Gold futures settled with heavy losses during the week. Following days, the market tried to recover these losses.
The market plunged nearly 5% on Monday after Pfizer said its experimental COVID-19 vaccine is more than 90% effective, based on early trial results. Still, that optimism faded over the next few days due to the massive increase in coronavirus cases in the United States and Europe.
According to Reuters, during the last two weeks, COVID-19 cases soared 100% in 13 states of the United States. Meanwhile, the total number of infected cases reached 52.45 million, increasing the need for stimuli.
Last week December Comex gold settled at $1886.20, dropping $65.50 or -3.36%.
Despite this collapse, gold prices continued to be supported by the prospect that the United States Federal Reserve will continue to inject permanent monetary stimulus, and a new package of financial aid from the US government is also expected.
Beware of companies that advertise vaccine results
Given the reaction that the gold market had to the news published Monday by Pfizer, analysts recommend that gold traders be alert for other companies to appear announcing the results of their tests in the coming weeks. Any announcement of a successful trial could put further downward pressure on gold prices.
On Wednesday, Moderna announced that it had sufficient data on the trial it was carrying out on its experimental vaccine against COVID-19. The company also is in the final phase and soon will be able to determine its efficacy.
Moderna’s announcement had a slight impact on gold prices because there are traders who do not trust this news. Despite Monday’s big stock market rally and the gold crash, traders are now focusing on all the problems to come until those vaccines can be distributed and COVID-19 is brought under control.
According to Bloomberg, there are still many details that are not well known about the production, distribution and more importantly, the very efficacy of the vaccine. We must bear in mind that this Pfizer trial in the last stage of development began less than four months ago. Therefore, it is not known how long the vaccine will maintain protection against the virus.
Michael Kinch, an expert in vaccine development and vice-chancellor of the University of Washington in St. Louis, said that the central question remains time.
Bloomberg also added that Pfizer’s vaccine against coronavirus had shown the effectiveness of more than 90% in initial tests. Still, if it goes ahead, there will surely be a shortage of doses for all, so the face masks will not disappear in a short time
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