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Gold futures settled lower on Tuesday, easing back after climbing over the last three trading sessions but failing to reclaim the key $1,900-an-ounce mark.
Prices had posted gains in recent days despite news of progress on a COVID-19 vaccine, which would ordinarily serve as a headwind for the precious metal.
“A softer dollar in recent days has alleviated some of the pressure on gold but it’s still struggling to pull itself considerably off its lows,” said Craig Erlam, senior market analyst at Oanda, in a market update. “The yellow metal found support around the $1,850-1,860 region, but it has since struggled to break back above $1,900.”
“Perhaps this is a new short-term range that’s emerging for gold but with the vaccine news seemingly improving week by week, it’s looking a little shaky below,” he added. The recent recovery in prices “may be encouraging to some but unless it breaks $1,900, that won’t last.”
December gold GCZ20, -0.09% declined by $2.70, or 0.1%, to settle at $1,885.10 an ounce, a day after eking out a nearly 0.1% gain and its third consecutive advance.
Silver futures for December delivery SIZ20, -0.59% shed 15 cents, off 0.6%, to settle at $24.651 an ounce, following a 0.1% gain on Monday.
Gold has been more responsive to news of a resurgence across the globe of the COVID-19 pandemic that has buoyed the commodity for months.
Indeed, the global tally for confirmed cases of the coronavirus that causes COVID-19 climbed to 55 million on Tuesday, according to data aggregated by Johns Hopkins University, while the death toll rose above 1.3 million. In the past week, the U.S. has averaged 155,442 cases a day, up 82% from the average two weeks ago and cases are rising in 50 states and territories. There are currently a record of 73,014 COVID-19 patients in U.S. hospitals, according to the COVID Tracking Project, topping the previous record of 69,993 set a day ago.
The spread of the virus has limited the downside move for gold, even as a report on Monday confirmed success toward a vaccine to combat the deadly pathogen.
The latest news on Monday from Moderna indicated that its two-shot vaccine candidate so far in late-stage studies has proven to be 94.5% successful at cutting the rate of infection of COVID-19.
Jeff Wright, executive vice president of GoldMining Inc., told MarketWatch that he believes the gold market is in for some continued weakness through the end of this week and into Thanksgiving next week.
“The pause for gold will turn only after Thanksgiving, when Washington must return to pass a spending bill to fund government past December 11th,” he said. Wright said that he doubts that a shutdown happens but noted that there could be gamesmanship by both political parties before a resolution toward an aid package is achieved.
“Megastimulus is on horizon but not until new congress in January,” Wright said. “Gold will benefit from both of these events.”
Read: Powell says need for more fiscal spending is greater than it’s been in a long time
Meanwhile, Atlanta Federal Reserve President Raphael Bostic during an interview on CNBC early Tuesday said that the central bank is monitoring the U.S. economy’s progress in the face of the pandemic’s re-emergence, in case its spread “portends something more deep,” but added that the Fed tool kit to combat the market effects of the outbreak “still have some juice,” a remark that could be bullish for gold.
In a separate interview on Tuesday, Federal Reserve Chairman Jerome Powell said that the need for fiscal stimulus is, perhaps, greater than other time in recent times.
“There hasn’t been a bigger need for it in a long time,” Powell said on Tuesday during a discussion conducted remotely via webcast to a business group in San Francisco.
Sanguine investors believe that longer-term weakness in the dollar may also lay the groundwork for higher gold prices eventually, as central banks and governments expend outsize funds to limit the economic damage from the pandemic, which could weigh on the dollar.
A weaker dollar is viewed as supportive for gold, which is priced in the currency, making it attractive to commodity buyers using other currencies.
The dollar was off 0.2% on Tuesday at 92.434 as gauged by the ICE U.S. Dollar index DXY, -0.24%.
Bullion prices didn’t see significant moves after a report Tuesday on retail sales activity in the U.S. showed that sales matched consensus forecast with rise of 0.3% in October, and sales excluding gas and automobile prices climbed 0.2%. Separately, data on import prices showed a drop of 0.1% last month. U.S. import prices minus fuel advanced 0.1% in October.
Separate data showed industrial production rose 1.1% in October.
Against this backdrop, copper, an industrial metal, saw its December contract HGZ20, -0.26% fall by 0.7% to $3.198 a pound. January platinum PLF21, +1.34% tacked on 1% to $937.10 an ounce, but December palladium PAZ20, -0.60% shed 0.8% to $2,326.50 an ounce.
