After the expectations of global financial institutions stabilized towards gold registering at the level of 3000 thousand dollars an ounce, they turned to decline near 1600 dollars.
Behind this major shift in the vision of analysts is the announcement of pharmaceutical companies such as Pfizer and Moderna about the creation of highly effective vaccines against the emerging corona virus.
Gold prices tended to decline for the third week in a row, as spot prices closed at the end of last Friday’s trading at $ 1787.79 an ounce, bringing the rate of decline to more than 13% since last August.
The vaccine disrupts the ascent
Ahmed Negm, head of market research and studies at Orbex in Kuwait, says that the discovery of effective vaccines represents a turning point in abandoning investment in gold as a safe haven amid increased risk appetite in global markets.
Najm added in a research note that investors have recently turned to other investment assets with positive signs in tackling the second wave of the pandemic.
He explained that the yellow metal prices that he witnessed during the year 2020 were mainly coming from complete risk aversion in global markets, and the trend for safe assets, but now the matter has changed.
He pointed out that it was and still exists that the yellow metal will reach the level of 3000 dollars based on the fact that the world will witness the second wave with the same repercussions that occurred at the peak of the first wave, but that the global trend now is to adopt lighter measures than their counterpart in the first wave, and the existence of a global agreement not to conduct an economic closure Large.
Accordingly, the price of an ounce fell below the level of $ 1,800 for the first time in five months, and it is expected that gold prices will witness successive declines during the current week’s sessions by about $ 70 to $ 80 an ounce, and we may see prices fall below the level of $ 1,700 unless there are factors supporting the rise. According to Orbex’s head of market research and studies.
He added that current market factors indicate that profit-taking and correcting gold prices will continue until it drops to $ 1,600 an ounce.
Danger is coming
Despite the decline in gold, the indicators released by the World Gold Council recently showed that investment funds have not given up their holdings of the yellow metal.
Najm explains the implications of this because the real profit-taking operations have not yet started.
He failed to take advantage of the falling dollar
On the other hand, the research note highlighted that gold has declined in conjunction with the dollar’s decline since November 11th, despite the inverse relationship between them, which confirms the weak demand for the precious metal.
However, he pointed out that there are strong prospects for approving a huge US stimulus package, similar to the package that was approved at the beginning of the outbreak of the pandemic, which helped gold to its highest historical levels above two thousand dollars an ounce.
Expected sales
On the other hand, Tai Wong, head of metal derivatives traded at BMO Capital Markets, indicated that gold is now moving below the average price in the last 200 days, which means that there is more technical selling, according to Bloomberg.
He stressed that the positive news about the effectiveness of vaccines is pressing hard on the price of the yellow metal.
It is worth noting that spot gold prices have increased since the beginning of the year until now by more than 17%.
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