Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Gold: When Vaccine Promises Meet Real-Time Infections

By Investing.com (Barani Krishnan/Investing.com)CommoditiesNov 10, 2020 04:10
ca.investing.com/analysis/gold-when-vaccine-promises-meet-realtime-infections-200442733
Gold: When Vaccine Promises Meet Real-Time Infections
By Investing.com (Barani Krishnan/Investing.com)   |  Nov 10, 2020 04:10
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

President-elect Joseph Biden summed it up correctly in his first coronavirus status update on Monday. “It is important to understand that the battle against COVID-19 is still months away,” he said, referring to how long it would take to vaccinate the American public, even as Pfizer (NYSE:PFE) announced substantial progress in its vaccine trials.

But the president-elect’s words made little difference as headline-reading algorithms had already made their call: Risk in, havens out.

Despite Biden warning about overexuberance in COVID-19 treatments at this point, gold futures lost $100 an ounce at one point Monday, the most vicious culling in a day since August as everything else from stocks to oil rallied.

Gold 60 Mins
Gold 60 Mins

The yellow metal’s collapse was also due to the steepening of the U.S. 10-year note yield curve, as markets priced out any fiscal easing by Congress due to an extremely divided political leadership. That fatally undermined a significant support factor for gold; the yield differential. It also pushed the dollar higher and accelerated panic selling as markets fell aggressively.

Gold bulls weren’t alone in their misery, though. Tech stocks became the unloved stepchild on Wall Street, as the NASDAQ index lost more than 1% by the close after a record high of 12,108 hit earlier in the day. The broader Dow index, which also coasted to a record of 29,934 on Monday, finished the day up nearly 3%—its most in six months. The immediate logic was that more people will soon be back working in their office cubicles instead of home, thereby greatly reducing the need for video-conferencing.

Clawing Back Ground

By Tuesday, gold had clawed back some ground. The spot price, which tracks bullion, trended above $1,880 by 1:00 AM ET Tuesday (0600 GMT)—about $20 higher from Monday’s final print. There was, of course, no certainty that this would persist, with charts suggesting there was more for bullion, as well as New York-traded gold futures to lose near-term.

In a blog at FX Street, gold chartist Omkar Godbole, referring to bullion’s low of $1,850.36 from the previous session, said:

“While prices have bounced from six-week lows, Monday's bearish engulfing candle is still valid.”

“The immediate bias will remain bearish while prices are held below Monday's high of $1,965. On the downside, the Sept. 28 low of $1,848 is key support, which, if breached, would expose the 200-day simple moving average (SMA) at $1,781."

Will It Be A Fourth Time Charm Or Curse For Gold?

Gold strategist James Stanley, blogging on Daily FX, also wondered if the sell-off had run its course as gold had seemed just days ago poised to recapture highs above $1,965 that might have set it on track to reprise August record highs above $2,000.

Stanley added:

“Prices are posturing in a key zone, running from $1,859-$1,871 on the chart, and this is the same area that came into play in both August, September and October to help set the lows.”

“The big question is whether the fourth time is a charm or a curse?

For good measure, Stanley referred to the Pfizer announcement, saying:

“This COVID (vaccine) news is still relatively new and the situation remains fluid: Be prepared for continued volatility in gold and other macro markets.”

Pfizer said a COVID-19 vaccine candidate it developed jointly with BioNTech SE (NASDAQ:BNTX) proved more than 90% effective in the latest trials. It plans to ask the Food and Drug Administration for emergency authorization of the two-dose vaccine later this month, after it has collected the recommended two months of safety data.

The U.S. drug giant also said it expects to produce up to 50 million doses of its vaccine in 2020 and up to 1.3 billion in 2021.

Super Freeze Conditions Needed For COVID Vaccines

But as the New York Times pointed out on Monday, wide distribution of Pfizer’s vaccine will be a logistical challenge. Because it is made with mRNA, the doses will need to be kept at ultra cold temperatures. While Pfizer has developed a special cooler to transport the vaccine, equipped with GPS-enabled thermal sensors, it remains unclear where people will receive the shots, and what role the government will play in distribution.

Taken together with the mRNa storage conditions stipulated by another COVID-19 vaccine developer Novavax (NASDAQ:NVAX), the risks of overexuberance on such reports become clearer.

According to published research, the mRNA needs to be kept at -70 degrees celsius, or -94 degrees fahrenheit, or below.

Amesh Adalja, senior scholar at Johns Hopkins Center for Health Security, said:

“The cold chain is going to be one of the most challenging aspects of delivery of this vaccination. This will be a challenge in all settings because hospitals even in big cities do not have storage facilities for a vaccine at that ultra-low temperature.”

According to reports, even the famed Mayo Clinic in Rochester, Minnesota, did not have such capabilities.

Extreme market moves like Monday’s in gold highlight the problem traders and their algorithms have in processing the potential of COVID-19 related treatments versus the threat of coronavirus infections in real-time that continue setting record highs in the United States.

On Monday, there were just over 59,000 COVID-19 patients in hospitals across the United States, the country's highest number ever of in-patients being treated for the disease.

Now, back to gold: Investing.com’s Daily Technical Analysis itself shows first-tier major support for gold at $1,819.50, second-tier at $1,777.15 and third-level at $1,703.95. That’s much lower than any of the analysts’ targets above.

As with all projections, follow the charts but temper them with fundamentals—and moderation—whenever possible.

Good luck.

Disclaimer: Barani Krishnan uses a range of views outside his own to bring diversity to his analysis of any market. He does not own or hold a position in the commodities or securities he writes about.

Gold: When Vaccine Promises Meet Real-Time Infections
 

Related Articles

Gold: When Vaccine Promises Meet Real-Time Infections

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email