Gold (NYMEX-XAU/USD-spot) made a multi-month month low of around 1764.69 cyber Monday before closing around 1777.02, slumped almost -0.55% on COVID-19 vaccine progress and hopes & hypes of an early mass-vaccination to achieve the much-awaited herd immunity against the invisible enemy (SARS-n-CoV-2).
On Tuesday, Gold jumped over +2% and made an early U.S. Session high of around 1815.23 on hopes of more COVID stimulus in December in the form of an interim mini CARES Act 2.0 for around $908B as-well-as Fed’s additional QE. Earlier Tuesday, Gold also made a session low of around 177.89 on further progress on the COVID vaccine as Moderna joined Pfizer/BioNTech in requesting EUA in the U.S. and both sought the same in the EU also.
On Monday, Gold plunged to the session low after Moderna said it has requested the U.S. FDA to authorize its COVID vaccine for emergency usage authorization (EUA) after the latest trial result show 94.1% effectiveness. Moderna’s mRNA vaccines possibly begin reaching Americans by late December. Air logistics are being prepared for the rapid distribution of the vaccine. But Moderna’s CEO also warned that despite the COVID vaccine or vaccinations, people need to maintain existing COVID mitigation protocols for some time as it’s not a silver bullet.
And another COVID vaccine candidate (BioNTech-Pfizer) is already awaiting the FDA review for an emergency use authorization (EUA) meaning there could be two vaccines against the coronavirus before the end of the year. But the risk-on sentiment was also affected on Oxford-Astra COVID vaccine doubt and re-trial. The credibility of a renowned institution like Oxford may be at stake over the COVID vaccine trial/manufacturing error fiasco. This may lead to a lack of public confidence in the Oxford COVID vaccine and many developed as-well-as developing countries, including India are relying heavily on the Oxford vaccine amid anti-China sentiment or trust deficit on the Russian vaccine.
As mRNA COVID vaccines are relatively costly, less available, and logistically difficult (extreme cold chain maintenance), many developing nations are relying heavily on the Oxford COVID vaccine. Thus the re-trail of the Oxford vaccine is not good news for the world, especially developing countries.
But on Monday, Gold soon recovered after the Biden transition team formally confirmed Yellen as the next U.S. Treasury Secretary. Yellen made her 1st tweet: “We face great challenges as a country right now. To recover, we must restore the American dream—a society where each person can rise to their potential and dream even bigger for their children. As Treasury Secretary, I will work every day towards rebuilding that dream for all”.
The market is expecting the ‘dream team’ of Yellen and Powell may be able to recover the U.S. economy from the corona carnage. Biden, who has a right ankle minor injury last week, tweeted: “We have no time to lose to address the economic crisis we face and build our economy back better. This team will be ready on Day One to pull every lever of government to help those hardest hit by COVID-19 and right the structural inequalities in our economy”.
On the political & policy front, as per reports, Trump may force Senate Republicans for another government shutdown in late December. Although there are virtually no hopes for CARES Act 2.0 in lame-duck Congress session in December amid a political war of words between Republicans and Democrats, on Monday, there was also a report that Senate bipartisan leaders are discussing the next fiscal stimulus package amid surging COVID and cold (economic hardship by vulnerable Americans). As a result, Gold recovered from the session low.
On late Monday, Fed Chair Powell reiterated the importance of emergency lending programs u/s 13(3) supported…