Gold prices on Wednesday retreated from a two-week peak scaled in the previous session as optimism on COVID-19 vaccine developments led investors to opt for riskier assets such as equities.
Spot gold fell 0.7% to $1,857.70 per ounce by 1017 GMT, after hitting its highest since Nov. 23 at $1,875.07 on Tuesday. U.S. gold futures slipped 0.7% to $1,862.60.
“The higher risk appetite seems to be gaining the upper hand again and coupled with the vaccine news, it seems to be weighing on gold prices,” said Commerzbank analyst Daniel Briesemann.
Also, while the fresh attempt in the U.S. for a new fiscal support package supported gold on Monday, today, the news is acting as an additional trigger for risk sentiment rather than gold.
Gold tends to gain from stimulus since it is seen as hedge against the inflation that could result from it.
Global stocks reached record highs on Wednesday due to a boost from the healthcare sector on positive coronavirus vaccine news.
After Britain on Tuesday became the first Western nation to start vaccinating its population with the Pfizer/BioNtech COVID-19 vaccine, Pfizer and Johnson & Johnson made further progress with trials and regulatory approvals, receptively.
On the stimulus front, U.S. President Donald Trump’s administration proposed a $916 billion aid package, while Congressional lawmakers were still working on resolving differences on the inclusion of business liability protections and state and local government aid.
Investors also looked forward to the U.S. Federal Reserve two-day policy meeting next week for clues on the direction of monetary policy.
“A dovish FOMC, particularly in the scenario where they look to cap rates in the longer end of the U.S. yield curve, should relight the gold rally,” said Jeffrey Halley, a senior market analyst at OANDA.
Silver slipped 1.3% to $24.25, while platinum edged 0.1% higher to $1,023.46 and palladium was down 0.3% to $2,302.73.
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