Gold loses over 1% to post first loss in 5 sessions
Gold prices ended lower on Monday, giving up earlier gains that had lifted prices toward their highest levels since 2012, as early positive results from a COVID-19 vaccine prompted a rally in the U.S. stock market, dulling haven demand for the precious metal.
“Gold sold off on upbeat trader attitudes after the Moderna news of a positive initial result from a Covid-19 vaccine test,” Jim Wyckoff, senior analyst at Kitco.com, told MarketWatch.
Biotechnology company Moderna Inc. MRNA, -10.41% announced positive results from a Phase 1 clinical trial for its experimental mRNA coronavirus vaccine.
The U.S. stock market jumped right away on the news, “suggesting keener risk appetite in the marketplace. That is usually bearish for safe-haven gold, Wyckoff said.
Gold for June delivery on Comex GC00, 0.54% GCM20, 0.54% fell by $21.90, or nearly 1.3%, to settle $1,734.40 an ounce, marking its first loss in five sessions. It had touched an intraday high of $1,775.80, which put the metal near its highest settlement since 2012. Last week, gold gained 2.5% based on the most-active contract at Friday’s close.
“After a torrid run higher in the first half of April, gold spent the next few weeks digesting those gains by trading sideways in an ever-tightening pattern,” said Brien Lundin, editor of Gold Newsletter. “This pattern indicated a looming breakout, and that’s just what we got late last week as gold powered through upside resistance on Thursday and Friday.”
“After gold’s breakout last week and the seeming likelihood of another big run higher, those holding big gold short positions were increasingly desperate to defend them, and the good news on a potential vaccine provided a great entry point,” he told MarketWatch.
Meanwhile, July silver SIN20, 1.14% surged 39.8 cents, or 2.3%, at $17.468 an ounce, after rallying by 8.2% last week.
Gold bullion has marked mostly rangebound moves from a high of $1,788 to a low of $1,676 an ounce in recent weeks but has been underpinned by worries about the harm to the global economy from the COVID-19 pandemic and the monetary-policy response by central banks to limit the impact of business closures, which were only recently being undone.
Federal Reserve Chairman Jerome Powell said during a CBS’s “60 Minutes” on Sunday that the central bank was still able to deliver more stimulus as needed to help alleviate problems for the economy.
“We’re not out of ammunition by a long shot,” Powell said.
Other metals traded on Comex settled higher, with July copper HGN20, 0.02% up almost 3.2% at $2.404 a pound. July platinum PLN20, 1.25% rose 6.4% to $869.30 an ounce and June palladium PAM20, 0.26% ended at $2,027.10 an ounce, up 9.1%.
In a note Monday, analysts at Zaner Metals said palladium has found support “from analyst predictions that very slow and gradual returns to production will balance the market” from the demand lost due to the pandemic.