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Jakarta, CNBC Indonesia – Global gold prices suddenly collapsed ahead of the opening of the United States (US) trading session on Monday (9/11/2020) following the latest news of the corona virus vaccine manufactured by Pfizer.
The US-based pharmaceutical company collaborated with Germany’s BioNTech and announced that its vaccine is effective in preventing diseases caused by the corona virus (Covid-19) by more than 90% without dangerous side effects.
Gold prices, which previously strengthened and were at their highest level since mid-September, suddenly collapsed 2.6% in less than 30 minutes, to US $ 1,900.78 / troy ounce, on the spot market, according to Refinitiv data. The position of gold improved slightly, at 19:28 WIB, to the level of US $ 1,914.81 / troy ounce, weakening by 1.91%.
Pfizer President and CEO Albert Bourla said the latest developments were a wonderful day for science and humanity. The final efficacy of the vaccine is said to be safe.
“The first results of the phase three clinical trial of the vaccine indicate the ability of our vaccine to prevent Covid-19,” Bourla said in a statement.
“With today’s news, we are getting closer to providing vaccines to people around the world and hopefully this will help end the global health crisis,” Bourla said.
The two companies plan to apply to the U.S. Food and Drug Administration (FDA) for emergency use of the vaccine in the third week of November 2020.
The news raises hope that life will soon return to normal, that the wheels of business will slowly recede, and that the economy will recover soon. As a result, risk assets immediately skyrocketed, Dow Jones index futures (futures) immediately shot more than 4%, and gold, which maintains safe-haven status, plummeted.
The price of gold has been trending stronger since last week, by almost 4%. The presidential election (pilpres) of the United States (USA) became the trigger for the strengthening of world gold.
Democrat Joseph ‘Joe’ Biden is destined to win against Republican Donald Trump in the US presidential election.
Although vote counting is still ongoing in some states, according to NBC News data, the Joseph ‘Joe’ Biden Democratic Party received 279 electoral vote, while Republican Party incumbent Donald Trump 214 electoral vote.
Earn Biden has exceeded the minimum limit of 270 electoral vote, which means that Biden will become the 46th president of the United States, while Trump must resign.
Binden’s victory means that the fiscal stimulus to be disbursed to deal with Covid-19 will be greater than that of Trump and the Republican Party.
Nancy Pelosi, Speaker of the Democratic Party House of Representatives (DPR), previously proposed a $ 2.2 trillion fiscal stimulus, which the Trump administration disagrees with and which Republicans reject.
Both fiscal stimulus and monetary stimulus are the fuel for gold to keep rising. The fiscal stimulus will benefit gold on two sides.
First, the greater the stimulus, the more money circulates in the economy; in theory, the US dollar will weaken. When the US dollar weakens, the price of gold will be cheaper for holders of other currencies, so demand has the potential to increase, the price will also go up.
Second, an avalanche of liquidity in the economy has the risk of causing an increase in inflation. Gold is traditionally considered a hedge against inflation, so when inflation rises, investors will chase it.
As a result, gold welcomed Joe Biden’s victory.
But now, with a vaccine from Pfizer that is able to effectively protect itself from the coronavirus, there is a possibility that the stimulus being disbursed will not be great, the gold fuel will also decrease.
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