(Bloomberg) -- Gold plunged while copper soars, with increasing optimism that a vaccine will spur a global economic recovery from the pandemic.Copper surged to a seven-year high in London while gold slid below $1,800 an ounce for the first time since July, with the sell-off accelerating after liquidation pushed it through a key technical support level. Gold’s decline quickened pace as investors continued to swap into riskier assets looking to profit from an eventual recovery from the pandemic.The divergence underscores how investors are increasingly turning away from gold, considered a haven in times of economic stress, in favor of copper, seen as a bellwether for the global economy and an important part of the transition to low-carbon energy resources.Gold prices are heading for a third weekly drop, having declined 13% from its record high in August. Copper rallied for a fourth day as other industrial metals climbed, while global stocks are on track for the best month on record with valuations near the highest in about 20 years. A gauge of global copper producers rose to the highest since January 2013, led by Teck Resources Ltd., Vale S.A. and Antofagasta Plc.China’s rapid economic rebound has driven its imports to record levels this year, helping to offset lower demand in the rest of the world. The country’s latest factory gauge, due Monday, is expected to show activity in the top copper consumer continuing a steady expansion.On Friday, data from the Shanghai Futures Exchange showed copper stockpiles in its warehouses falling to the lowest since late 2014.“The optimism sparked by positive vaccine news has particularly impacted gold, which continues to slump despite a weaker dollar,” said Tai Wong, head of metal derivatives trading at BMO Capital Markets. “It’s below the 200-day moving average now, which could trigger more technical selling.”Bullion’s steep decline was in line with continued outflows of gold exchange-traded funds, which are now headed for their first monthly outflow this year. The funds have been a crucial support pillar for bullion in 2020, so their current erosion has significant implications for the price.Positive vaccine developments, which started at the beginning of the month with the Pfizer Inc. announcement, have seen bullion on a downward path even though there are uncertainties surrounding the shots.U.S. President Donald Trump’s statement that he will relinquish power if the Electoral College affirms Democrat Joe Biden’s win also signaled that there’ll be a peaceful transfer to the new administration, though he signaled he may never formally concede defeat and may skip the Democrat’s inauguration.“Gold has moved into the next ‘down-leg’ of its correction phase,” according to United Overseas Bank Ltd. market strategist Quek Ser Leang. A break of the support zone between $1,760 and $1,780 would open up the way for further weakness toward the $1,600s, he said.Spot gold fell 1.5% to $1,788.53 an ounce at 2:05 p.m. in New York. Bullion for February delivery declined 1.3% to settle at $1,788.10 an ounce. Silver dropped 3.6%, while platinum and palladium advanced. Copper for three-month delivery on the London Metal Exchange rose 1.3% to $7,499.50 a metric ton. The Bloomberg Dollar Spot Index fell 0.1%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Gold dropped to the lowest since July as positive vaccine news, strong economic data and the start of U.S. President-elect Joe Biden’s formal transition undermined the metal’s haven appeal.Prices tumbled for a second day to just above $1,800 an ounce as the Dow Jones Industrial Average topped 30,000 for the first time. Gold had been trading in a tight range for weeks before the U.S. election, and looked set to break upward immediately after the poll. Then Pfizer Inc. announced its Covid-19 vaccine was 95% effective at preventing the disease on Nov. 9, sparking a rotation into risk assets that drove down gold.“Gold prices are tumbling at a fast clip following a technical break below support,” which suggests that the bullish trade in bullion is further being unwound, in line with investment outflows seen in exchange-traded funds during recent weeks, TD Securities analysts led by Bart Melek said in a note. “Investment appetite for precious metals has significantly suffered, pointing to a reversal in safe-haven flows catalyzed by the vaccine announcement.”Traders will now be watching the $1,800-an-ounce mark, which represents a key support for gold, according to Ole Hansen, head of commodity strategy at Saxo Bank A/S.“In the short term, short sellers may look for additional stops down toward support at $1,800, the 200-day moving average,” he said. “With vaccine news occupying the headlines, gold is likely to struggle.”The metal is under additional pressure as political uncertainty eases. Following weeks of inaction, the General Services Administration acknowledged Biden as the apparent winner of the U.S. presidential election, and President Donald Trump called on his agencies and departments to cooperate.Funds Sell OffMeanwhile, a sell-off in gold-backed ETFs resumed on Monday after pausing at the end of last week. The funds, which were crucial to gold reaching its August record, have dropped more than 60 tons since Pfizer’s vaccine announcement.Spot gold declined as much as 2% to $1,800.47 an ounce, the lowest level since July. Bullion for February delivery on the Comex fell 1.8% to settle at $1,810.90 an ounce. Spot silver dropped 1.6% while palladium fell and platinum rose.Still, some market observers remain optimistic about the longer-term outlook for gold.Biden plans to nominate former Federal Reserve Chair Janet Yellen to serve as his Treasury secretary, people familiar with the matter said. That should boost prospects for fiscal stimulus going forward, which along with protracted low interest rates will provide a supportive environment for gold, according to Carsten Fritsch, an analyst at Commerzbank AG.“After its current losing streak, gold should therefore begin climbing again, even if this may well take some time yet, and is likely to start from a lower level,” he wrote in a note.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Gold fell to a four-month low as growing optimism over a coronavirus vaccine and signs of a increasing momentum in U.S. economic growth stifled demand for the metal as a haven.Bullion extended last week’s loss after AstraZeneca Plc said its vaccine prevented most people from developing Covid-19, marking another promising development in the quest to end the pandemic. U.S. business activity powered ahead in November at the fastest pace since March 2015, IHS Markit figures Monday showed. The dollar erased losses after the report.Gold prices have posted two straight weekly declines and holdings in exchange-traded funds backed by the metal have slipped as hopes for a virus vaccine buoyed markets and curbed demand for haven assets. Improving U.S. economic growth could dim chances for economic stimulus, which had helped drive gold to a record in August, analysts said. U.S. stocks rose on Monday.“The fear of missing out seems to be more important, so even ETFs are selling,” George Gero, a managing director at RBC Wealth Management, said by phone. “That I think is causing a little selling in the gold market for now.”Spot gold declined 1.8% to $1,837.60 an ounce at 2:27 p.m. in New York after touching the lowest since July 21. Silver and platinum also fell, while palladium rose.Gold is trading firmly below both its 50- and 100-day moving averages, and Georgette Boele at ABN Amro Bank NV said the metal dropped further on Monday after breaking through its $1,850 support level.“Gold prices broke through technical support, catalyzing a rush to the exits,” said Daniel Ghali, a TD Securities strategist. “For weeks, capital outflows from ETFs have added pressure to gold markets as a second wave sweeps across the globe, keeping inflation expectations capped, while the vaccine announcements have also seen safe-haven flows reverse.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.