(Reuters) – Gold fell to its lowest level in four months on Tuesday and looked set to drop below the psychological level of $ 1,800 as progress on COVID-19 vaccines and hopes for a quick transition in the White House have pushed investors into riskier assets.
Spot gold fell 1.7% to $ 1,804.81 an ounce at 11:40 a.m. EST (4:40 p.m. GMT), after hitting its lowest since July 17 at $ 1,800.01.
US gold futures fell 1.9% to $ 1,802.40.
“More optimism about the vaccine-based economy has taken some of the safe haven status away from the gold market,” said David Meger, director of metals trading at High Ridge Futures.
“Less political worry about moving forward” has also reduced the need for safe havens, Meger added.
Major Wall Street indices surged after Joe Biden moved closer to take the reins of power in January with a formal nod.
“What has been a game changer has been the ability of all vaccines to show promise,” said George Gero, Managing Director of RBC Wealth Management, adding that the climb to gold will be long under these circumstances.
Safe-haven bullion fell 1.9% on Monday after another global pharmaceutical company AstraZeneca reported promising trial results for a vaccine.
In addition, Biden is expected to appoint former Federal Reserve Chairman Janet Yellen as Secretary of the U.S. Treasury, and investors see Yellen as a force for more fiscal action to tackle the economic crisis triggered by the pandemic.
The decline in gold also came despite a weak dollar, which remained near a nearly three-month low.
Bullion, a hedge against currency degradation and inflation, has risen another around 19% this year, mainly thanks to an unprecedented global stimulus from a pandemic.
Elsewhere, silver plunged 1.6% to $ 23.20 an ounce, platinum jumped 2.8% to $ 951.66, and palladium fell 0.9% to $ 2,334.95 .
Reporting by Shreyansi Singh in Bengaluru, additional reporting by Sumita Layek; edited by Barbara Lewis