Progress in COVID-19 vaccine pressurized rates of gold and silver

Optimism about COVID vaccine has dented gold prices over past two weeks. There was a marginal fall in Gold and silver prices today in Indian markets despite positive global cues. On MCX, gold futures slid to 52,260 per 10 gram while silver edged 0.16% lower to 62,300 per kg. In the previous session, gold had finished 0.54% higher while silver had risen 1.2%. But on a weekly basis, gold had dropped 700 per 10 gram, its second straight weekly loss as optimism about COVID vaccines affected the price.

The dollar index was down 0.17%  and gold prices have edged higher today. Gold rose to $1,864.15 an ounce, up 0.2%, silver firmed 0.4% to $22.06 per ounce.

“Gold has come under pressure after failing to break past the $1900/oz level. But price has so far managed to hold above the key $1850/ounce level. Gold is pressurized by progress on vaccine for COVID-19 even while there is uncertainty as to how soon a vaccine will become available. A number of companies have reported progress in vaccine trials,” Kotak securities remarked.

“However, supporting gold price is rising virus cases in US and Europe which has forced authorities to impose tighter restrictions hampering economic activity. Rising virus cases, uneven economic recovery and comments from central bank officials has added to market expectations that more stimulus measures may be taken. Gold continues to remain in the broad range of $1850-1900/oz amid mixed factor and this may continue unless there are fresh triggers. However, with rising virus risks and hopes of continuing stimulus measures, we expect buying interest to emerge at lower levels,” the firm added.

The world’s largest gold-backed exchange-traded fund or gold ETF, rose 0.24% to 1,220.17 tonnes.

The U.S. stimulus aimed at cushioning the economic blow from the COVID-19 pandemic also helped support gold prices. US Treasury Secretary Steven Mnuchin on Friday pointed out that negotiations on stimulus measures would continue, even as he defended his decision to end several of the Federal Reserve’s pandemic lending programs on December 31.

Gold traders are waiting in anticipation for the Federal Open Market Committee meeting which is due on Wednesday.

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