Gold prices eased on Wednesday as encouraging vaccine developments pushed investors towards riskier equities, although hopes for more U.S. stimulus kept bullion near two-week highs hit in the previous session.
Spot gold fell 0.3% to $1,865.46 per ounce by 0309 GMT, after hitting its highest since Nov. 23 at $1875.07 on Tuesday, while U.S. gold futures eased 0.3% to $1,870.20.
“Gold still has some firepower from all the stimulus, despite the fact that the vaccines are being rolled out… (stimulus) will provide gold with a lot of tailwind going into the year-end,” said ED&F Man Capital Markets analyst Edward Meir.
The Trump administration on Tuesday proposed a package worth $916 billion including liability protections and state and local government aid, which leading Democrat and Republican lawmakers deemed as progress in the ongoing stimulus talks.
Gold is seen as a hedge against inflation that might result from the unprecedented stimulus pumped into the economy this year.
Buoying Asian shares to record highs, Johnson & Johnson said it could obtain late-stage trial results of a single-dose COVID-19 vaccine it is developing earlier than expected.
Pfizer Inc cleared the next hurdle in the race for its emergency vaccine approval in the United States after a regulator released documents that raised no new issues about its safety or efficacy.
Stimulus measures will be key as it will weaken the dollar and generate more liquidity that will move into gold, said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide.
Markets are hoping a stimulus will come through by next week and gold could move towards $1,900 by the end of the year, he added.
Silver slipped 0.7% to $24.38 an ounce, while platinum rose 0.6% to $1,028.17 and palladium was up 0.1% to $2,311.87.
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