Gold price dropped lower on Friday morning over hopes for COVID-19 vaccines coming out in some months’ time, coupled with the sentiments coming from European central banks signaling that it may leave interest rates and stimulus unchanged in the short term.
Gold futures lost about by 0.12% to $1,799.15 by 10:34 7:19 AM GMT, retreating below the $1,800 mark.
European Central Bank President, Christine Lagarde, said at the ECB Governing Council meeting earlier this week that the European Central Bank sees monetary stimulus in Europe to be necessary in the short term fueling investor risk appetite in lieu of gold traders pulling back some of their long positions in the precious metal.
Recall that about a day ago, Nairametrics reported on the shares of Moderna Inc rallying after a small-scale study showed that its experimental COVID-19 vaccine produced high levels of virus-killing antibodies.
Quick fact: Humans mainly use gold for making jewelry, physical coins, and recently, for industrial purposes such as in the production of electronics. However, it is rare enough that many people don’t have it, or have it in minute quantities. Humans are emotionally and physically drawn to gold. It provides a significant store of value. Global Investors buy gold to hedge against inflation.
Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics spoke about the pullback in gold price as it falls below the $1,800 mark. He said:
“As expected, gold fell below USD1,800/oz on USD gains and profit-taking. The yellow metal could still correct further without threatening the long-term rally.
“Although the markets were in a “risk-off” mode as evidenced by a sharp drop in China’s equities, including the biggest fall in the CSI300 equity index since February, gold still fell.”