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PRECIOUS-Gold falls as Biden transition, vaccine hopes erode appeal

Published 25/11/2020, 03:05 pm
© Reuters.
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(Updates prices)

* Asian equities extend gains

* More gold selling likely below $1,800/oz - analyst

* Fed minutes due at 1900 GMT

* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3aIRuz7 in an external browser

By Nakul Iyer

Nov 25 (Reuters) - Gold fell on Wednesday as the formal start of Joe Biden's transition to the White House and optimism over coronavirus vaccines dented bullion's safe-haven appeal.

Spot gold XAU= eased 0.1% to $1,805.00 per ounce by 0648 GMT. On Tuesday, it hit its lowest since July 17 at $1,800.01.

U.S. gold futures GCv1 dipped 0.1% to $1,802.80.

"We're moving into a new phase in gold as vaccine developments are changing the regime of pandemic-caused disruptions and headwinds to growth that gold markets were pricing in," said Lachlan Shaw, National Australia Bank's head of commodity research.

"If U.S. real long yields range trade around current levels, it's difficult to see gold breaking out and then sustaining a strong rally towards $1,900 and $2,000."

Global equities scaled a record peak, bolstered by U.S. President Donald Trump's go-ahead for Biden to start receiving daily intelligence briefings and an accelerating COVID-19 vaccine race. MKTS/GLOB

A break below $1,800 could see more selling of gold and this move towards assets considered higher risk could continue, said ED&F Man Capital Markets analyst Edward Meir, adding bullion should find some support near $1,750-$1,770.

But, Wall Street bank Goldman Sachs (NYSE:GS) maintained its bullish near-term forecast for gold, terming the current correction a "churn" before prices go up again as "more evidence of inflation emerges."

Lower interest rates reduce the opportunity cost of holding non-yielding gold, which has gained more than 18% this year given its status as a hedge against likely inflation spurred by the massive stimulus unleashed globally.

Investors now await minutes from the U.S. Federal Reserve's last meeting due at 1900 GMT. XAG= eased 0.3% to $23.19 an ounce. Platinum XPT= rose 0.4% to $964.60, while palladium XPD= was down 0.4% at $2,339.43.

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