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In recent days, the positive news of the new crown vaccine sent gold down sharply. On Wednesday (25), gold futures tried to pull back from the daily decline and finally closed slightly higher.
Goldman Sachs commodities analysts Mikhail Sprogis and Jeffrey Currie said the main reasons for the drop in gold prices are cyclical turnover, stock market preference and the absence of substantial changes in inflation.
“The price of gold has corrected substantially in the last two days, and the trading price is now close to $ 1,800 an ounce. Although real 5-year and 10-year interest rates have actually fallen and the US dollar has fallen. has weakened, gold continues to fall to this level.
“We believe this is due to the procyclical rotation of stocks and inflation expectations are flat and not increasing. These are the factors that propelled gold from late spring to summer.”
“So a strong rotation without inflation hurts gold.”
- Gold futures for December delivery rose 90 cents or less 0.1% to close at $ 1,805.50 an ounce.
According to Dow Jones market data, gold plunged 1.8% on Tuesday, reaching its lowest level since July.
- December silver futures prices rose 6.2 cents, or 0.3%, to close at $ 23,362 an ounce.
FactSet data shows that so far this week, gold is down 3.3% and silver is down more than 4%.
AstraZeneca announced the results of the second and third phase of clinical trials on Monday. The overall efficacy of the AZD1222 “Oxford vaccine” in cooperation with the University of Oxford is approximately 70.4%, and the efficacy of the low-dose vaccine reaches 90%. Prior to this, Pfizer and BioNTech, as well as the pharmaceutical manufacturer Moderna, had posted upbeat news about similar vaccines.
XM senior analyst Marios Hadjikyriacos said that the US dollar has been weak for several days in a row and that the trend for bonds is moderate, but gold continues to fall, which does not bode well for the recent trend in gold.
“In the field of commodities, even though the US dollar generally depreciated yesterday, the price of gold still fell sharply. This is an ominous sign for gold. Because the market speculates that the vaccine implies that real interest rates will rise, gold is no longer favored.
The ICE dollar index fell 0.3% to 91.953, which is close to a 3-year low, and has fallen about 0.2% so far this week. A weak dollar generally increases the attractiveness of dollar-denominated commodities to investors.
At the same time, the 10-year bond yield was fairly stable this week at around 0.88%. If the yield on government debt increases, it will weaken the demand for non-yielding gold.
In recent months, investors were quick to seek safe-haven assets due to concerns about the epidemic, driving up the price of gold, but the recent positive development of several new corona vaccines has boosted market confidence and hidden temporarily concerns about increasing cases.
Half an hour after the close of the gold market, after the Fed released the minutes of the most recent meeting on Wednesday, there were no substantial changes in e-commerce in the commodity market.
The minutes of the meeting indicated that the “majority” of Fed officials hoped to give investors clearer guidance on the ongoing implementation of the $ 120 billion bond purchase plan. However, given the uncertain economic outlook, the “few” participants were unwilling to do so in the short term. Change.
In addition to the minutes of the Fed meeting, other economic reports were also released ahead of schedule due to the market closings on Thursday for Thanksgiving and Black Friday, including the Unemployment Claim Report and the inflation report.
In the week ending November 21, the number of people claiming unemployment benefits for the first time increased by 30,000 to 778,000 after seasonal adjustments. The number increased for the second week in a row and peaked at 5 weeks.
At the same time, the Commerce Ministry reported that inflation was weak in October, moving the Fed away from the 2% inflation target. The annual rate of PCE, the Fed’s favorite inflation indicator, fell to 1.4% in October from 1.5% the previous month.
Trade in other metallic raw materials
Precious metals did not respond much to previous economic data.
- Copper futures prices for December delivery rose 1 cent, or 0.3%, to close at $ 3.3095 a pound.
- Platinum futures prices for January delivery rose $ 11.50, or 1.2%, to close at $ 969.80 an ounce.
- Palladium futures for March delivery fell about $ 7.10, or 0.3%, to settle at $ 2,364.70 a pound. This is the most recent and most active contract for palladium.
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