World news – IN – Gold prices book biggest daily drop in over 7 yearsen

Gold futures suffered their steepest daily drop in more than seven years on Monday, as a positive report on a vaccine candidate sent the dollar and government bond yields higher, pressuring bullion

Pfizer and BioNTech on Monday said their COVID-19 vaccine candidate was 90% effective at preventing COVID-19, derived from the novel strain of coronavirus

In a Monday newsletter, Rhona O’Connell, head of market analysis for EMEA and Asia at StoneX, pointed out that the vaccine study included “‘tens of thousands’ of volunteers and had arguably prevented infection in the vast majority” While the study isn’t yet complete, “in these volatile markets, gold’s response makes sense,” she said

December gold
GCZ20,
108%

GOLD,
-682%

GC00,
108%
declined by $9730, or about 5%, to settle at $1,85440 an ounce, after gold logged its biggest weekly gain in three months on Friday

The metal marked the sharpest daily percentage drop for a most-active contract since June 2013, according to Dow Jones Market Data

Silver futures
SIZ20,
233%

SI00,
233%,
meanwhile, shed $196, or 76%, to settle at $23701 an ounce That followed a weekly gain of 85%, which marked its sharpest weekly gain since Aug 7

The tumble in safe-haven metals come as the 10-year Treasury note yield
TMUBMUSD10Y,
0919%
was at 095% in Monday dealings, compared with 0821% on Friday Bond prices fall as yields rise Meanwhile, the dollar rose 07%, as gauged by the ICE US Dollar Index
DXY,
-011%

Rising yields and a stronger US buck can make dollar-pegged assets, like gold and silver, which don’t offer a coupon, less attractive to overseas buyer

Promise of a vaccine for the deadly coronavirus infection has always been viewed as a bearish scenario for gold prices in the near term because it could help forge a stronger economic recovery

“It seems this is finally the good news the global marketplace has been awaiting for months — during a grim period when the pandemic appears to be worsening in places like the US and Europe,” said Jim Wyckoff, senior analyst at Kitcocom, in a daily note

US benchmark stock indexes were sharply higher Monday, with the Dow Jones Industrial Average
DJIA,
294%
and the S&P 500
SPX,
117%
touching record highs The risk-on sentiment contributed further to gold’s decline

Democrat Joe Biden’s victory in the US presidential election has also contributed to gold’s decline Monday, Jeff Wright, executive vice president of GoldMining Inc, told MarketWatch

“The market is pricing in a divided government” with Democrats in the White House and Republicans controlling the Senate, so an “era of true compromise could be possible,” he said, adding that he pivots towards “mega-stimulus coming in February”

The Federal Reserve’s monetary policy will likely remain the same well into 2021, so Wright sees gold pulling back and consolidating before heading back toward $2,000

In other Comex trading, copper, an industrial metal which can benefit from an improved economy, saw its December contract
HGZ20,
-001%
edge up by less than 01% to end at $3156 a pound, down from the session high of $3208

January platinum
PLF21,
066%
settled at $86740 an ounce, down 36%, and December palladium
PAZ20,
-004%
ended down by less than a dollar, at $2,49920 an ounce

Myra P Saefong, assistant global markets editor, has covered the commodities sector for MarketWatch for 20 years She has spent the bulk of her years at the company writing the daily Futures Movers and Metals Stocks columns and has been writing the weekly Commodities Corner column since 2005

Mark DeCambre is MarketWatch’s markets editor He is based in New York Follow him on Twitter @mdecambre

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Gold, Joe Biden, Gold as an investment