For the third day in a row, gold futures closed lower. Today gold opened at $ 1,872.00 and at 5:00 p.m. EST is currently pegged at $ 1,864.70 after taking into account the current net decline of $ 9.20 (-0.49 %).
Although the cumulative losses over the past three days were only about $ 23.50, each day, compared to the day before, resulted in a low and a low. Today’s low was around $ 1,850, which closely matches the low reached on Monday, November 9, when market forces lowered the precious yellow metal by around $ 100.
At the same time, the value of the US dollar has declined for the past six consecutive days. It fell from 92.95 a week ago on Thursday 12 November and is currently pegged at 92.225. In the last five trading days, the dollar has lost almost 0.75%.
It is a well-established fact that a weak dollar provides a tailwind that will generally push up the price of gold. However, in the case of the past week, we have seen both gold and the US dollar trade. While the dollar’s decline over the past week provided upward support for gold, it was not enough to drive gains for the metal.
While many analysts have attributed the recent drop in gold prices to the strength of the dollar this week, nothing could be further from the truth. The recent declines in gold prices can be partially attributed to gains in US stocks, given that on Monday the Dow Jones industrial average closed at a record high.
So the most important question we need to answer is whether the decline in gold this week was not the result of the strength of the dollar, with US stocks posting gains on Monday and Thursday, what was the driving force that brought down the precious yellow metal?
It appears to be a combination of results from two vaccines. The announcement by Pfizer Pharmaceuticals and Moderna that they have both completed the third stage trials and the data collected indicates that both are more than 90% effective, giving gold prices a boost.
This cannot be underestimated, as the efficacy of these two vaccines has the potential to eradicate the virus in the same way as vaccines against polio and smallpox. An inactivated polio vaccine (IPV) is the only polio vaccine given in the United States since 2000 and, according to the CDC, protects almost all children (99 out of 100). Simply put, this wonder of science has mostly eradicated polio.
Another example is the smallpox vaccine, which the CDC says was made from a virus called vaccinia, a poxvirus similar to smallpox. This vaccine is responsible for the eradication of smallpox and, as such, the virus no longer exists in nature.
Coronavirus vaccines have been shown to be up to 95% effective, which puts them in the efficacy category of polio and smallpox vaccines. It is a real game-changer with the ability to eradicate the COVID-19 virus in the same way that smallpox and polio vaccines did.
It really means that there is a very bright light at the end of this dark tunnel. However, the timeline in which the general public must obtain these vaccines will not come this year and will likely not be available to the general public until April or May 2021.
The pandemic is currently reaching epidemic figures. Yesterday, it was reported that the United States saw another 166,000 people infected. This will most certainly result in more spending, adding to the economic fallout that we will face once we reach the end of the tunnel.
It is for this reason, although I am extremely optimistic that we may be successful in eradicating the coronavirus, I am concerned that the timing before that happens will cause more financial difficulties and therefore create the need for fiscal stimulus. more important. It is the lack of fiscal stimulus that is also responsible for the drop in gold prices since it hit a new record high of $ 2,088 on August 10.
Many analysts, including myself, believe that the next round of fiscal stimulus will be extremely bullish for gold, and I believe that will translate into a new record high.
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