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PRECIOUS-Gold set for second weekly dip on end of Fed stimulus, vaccine optimism

Published 2020-11-20, 06:10 a/m
© Reuters.
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* Gold's move above $2,000 in 2021 still likely - Citi

* Outflows of about 40 tonnes so far in November from SPDR ETF

* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa (Updates prices)

By Asha Sistla

Nov 20 (Reuters) - Gold was headed for a second weekly decline on Friday on growing optimism about COVID-19 vaccines, with the U.S. Treasury's call to end emergency loan programmes also limiting bullion's safe-haven appeal.

Spot gold XAU= eased 0.1% at $1,866.38 per ounce by 1227 GMT and was down 1.2% for the week.

U.S. gold futures GCv1 were up 0.1% at $1,864.

U.S. Treasury Secretary Steven Mnuchin said key lending programs at the Federal Reserve would expire on Dec. 31, casting doubts over the future of fiscal support. the news weighed on risk sentiment, it did not stop world stocks from gaining on the back of brightening prospects for a faster economic recovery thanks to positive developments on the vaccine front. underlying momentum behind gold has dissipated," said independent analyst Ross Norman, adding gold was pressured by year-end profit-taking and investors liquidating long positions.

Investors pulled $4 billion from gold, the biggest outflow ever, amid a rush for riskier assets last week, BofA said on Friday. holdings in the SPDR Gold Trust GLD exchange-traded fund have seen net outflows of about 40 tonnes so far in November. GOL/ETF

"But it's important to remember that the gold bull run was never predicated on COVID-19," and factors including a weak economy and the likelihood of interest rates remaining subdued for an extended period will continue to support it, Norman added.

Lower interest rates make gold an attractive bet by reducing the opportunity cost of holding the non-yielding metal, with near-zero interest rates globally contributing to its about 23% gain for the year.

"Positive COVID-19 vaccine developments should slow but not end the secular gold bull cycle without a hawkish pivot in U.S. monetary policy," Citi Research said in a note. XAG= rose 0.2% to $24.13 per ounce. Platinum XPT= climbed 0.3% at $954.21, while palladium XPD= rose 0.5% to $2,337.40.

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