The precious metals market gradually exhibit a downward trend on Tuesday morning. Gold continues to be popular as a “protective” asset, but the situation in the markets has changed: interest in risk has increased, which means that gold has temporarily faded into the background. The optimism of market participants was caused by news about another successful trial of another vaccine against coronavirus infection.
Gold futures contracts for December delivery on the electronic trading platform in New York fell by 0.11% or $2.15, which sent it to the price level of $1,885.65 per troy ounce. Support for the precious metal was $1,860.7 per troy ounce, while resistance was located at $1,898 per troy ounce.
Silver futures contracts for December delivery also slightly declined by 0.04%, which sent the price at $24.8 per troy ounce.
The bulk of the pressure on gold is concentrated in the sector of biotechnological development of the COVID-19 vaccine. Another company, Moderna, announced the successful result of clinical trials of a coronavirus vaccine, the effectiveness of which is close to 94.5%. Thus, the third phase of testing has ended, which means that the vaccine’s release to the market remains a matter of time. Of course, investors were encouraged by such news, especially since this is the second vaccine in the last two weeks that is being prepared to enter the broad markets. In this regard, the risk becomes more popular, and the”safe haven”, gold, goes by the wayside. However, analysts warn that the rollback of the precious metal will be short-term, since the hype around drugs that protect against coronavirus will end very soon, and fears of a complex epidemiological situation will return to its place. Therefore, the rejection of purchases of precious metals in favor of riskier assets will be temporary.
In addition, experts stressed that the use of the vaccine will require a long period of time. It will take at least six months to implement and distribute it. And we are talking only about developed countries, where the whole process can be started faster. The rest of the world will have to wait even longer. Therefore, flashes of enthusiasm are not too dangerous for the market of precious metals, which will continue to be the most reliable assets on the market.
Of course, the introduction of a coronavirus vaccine is the best thing that can happen in 2021. At least, hopes that economic growth will recover and combat the effects of the crisis on the background of the pandemic begin earlier and be more effective will obviously increase. However, this will not happen immediately, and for some time politicians and the Central Bank of the world will remain in a panic about the growing number of new cases of coronavirus infection. Thus, one vaccine cannot start the whole process of getting out of a difficult situation.
In addition, the US dollar is still under pressure and will decline even more in the near future. This means that gold will have time to catch up and add well more than once.
Copper futures contracts for December delivery fell 0.1% which sent the price to $3.2237 per pound.
The material has been provided by InstaForex Company – www.instaforex.com
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