Gold Dips on Mixed Covid Messaging, Lack of Stimulus Ahead of Fed

© Reuters.

By Barani Krishnan – Gold fell back under a bearish cloud on Monday as mixed messaging over Covid-19 vaccine rollouts and lockdown threats counteracted with the lack of fiscal aid for the pandemic ahead of the Fed’s monthly meeting.

on New York’s Comex settled down $11.50, or 0.6%, at $1,832.10 an ounce. That was the lowest for a Comex gold close since Dec. 2 as agreement for a COVID-19 economic stimulus remained out of reach.

, which reflects real-time trades in bullion and which algorithms and hedge funds use to decide on immediate direction in futures, slid $12.74, or 0.7%, to $1,826.86 by 2:30 PM ET (19:30 GMT).

But gold also turned nearly positive at one point on Monday morning, almost matching the overnight high of $1,845.45. That came after mixed messaging over the Covid-19 vaccine program and the impact of new case counts on hospitalization.

New York on Monday became the first U.S. state to administer the Pfizer (NYSE:) coronavirus vaccine in the United States following its approval by the federal government for emergency use. State Governor Andrew Cuomo said five hospitals in New York City received the Pfizer vaccine shipments on Monday, and 39 additional hospitals were expected to receive doses in the next two days.

Separately, Moncef Slaoui, chief adviser to the US Covid-19 vaccine program, said the United States hopes to give out the vaccine, developed by Pfizer under a joint-venture with Germany’s BioNTech SE (NASDAQ:), to 100 million Americans by spring 2021.

Gold futures, under pressure even before the start of Monday’s official Comex session in New York, wasn’t helped by the optimism over the vaccination program that worked better for risk assets like stocks and oil, rather a safe-haven like gold.

But New York City Mayor Bill de Blasio also muddled the message for investors in the yellow metal when he said he was considering another full lockdown of New York City, which according to him might be overwhelmed by new Covid-19 cases and hospitalizations despite the start of vaccinations for the virus.

Gold prices came back off the lows of the day, hovering at $1,830 in post-settlement trade.

They may remain there as investors try to gauge the Federal Reserve’s mood ahead of the final decision on Wednesday by its Federal Open Market Committee (FOMC) on 2020 interest rates and market support.

On the central bank’s menu will be expanding the $120 billion in bonds a month through quantitative easing, adjusting the maturity of those purchases, or providing “outcomes-based” guidelines it will need to see before tightening policy from its current historically loose level, CNBC reported.

Interest rate cuts are not part of that policy buffet, as the Fed’s benchmark rate is already anchored near zero.

Gold bears might need to exercise as much caution at this point as longs in the yellow metals, analysts said.

“The lack of any strong follow-through selling warrants some caution for aggressive bearish traders and positioning for any further depreciating move amid absent relevant market moving economic releases from the U.S.,” said Haresh Menghani, an analyst who blogs about gold on the FX Live platform.

“In the meantime, traders might continue to take cues from the broader market risk sentiment,” Menghani added. “This, along with the US stimulus headlines, will influence the USD price dynamics and produce some short-term trading opportunities around the XAU/USD. The key focus, however, will remain on the FOMC policy meeting on December 15-16.”

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