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PRECIOUS-Gold slumps over 4% as stocks soar on COVID-19 vaccine euphoria

Published 10/11/2020, 01:51 am
Updated 10/11/2020, 06:12 am
© Reuters.
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* Pfizer , BioNTech to seek U.S. emergency use vaccine authorization

* Wall Street hits record highs

* Silver drops over 7%

* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa (Updates prices)

By Sumita Layek

Nov 9 (Reuters) - Gold tumbled over 4% on Monday as news of the first successful late-stage COVID-19 vaccine trials prompted investors to dump safe-haven bullion and flock to riskier assets.

Spot gold XAU= was down 4.8% at $1,857.61 per ounce by 1:47 p.m. EST (1847 GMT), while U.S. gold futures GCv1 settled down 5% at $1,854.40.

Spot prices beat a sharp retreat from a near two-month peak of $1,965.33 hit earlier amid a weaker dollar and hopes for more stimulus following Joe Biden's victory in the U.S. elections.

Equities surged after Pfizer Inc (NYSE:PFE) PFE.N said its experimental COVID-19 vaccine was more than 90% effective. Pfizer and German partner BioNTech SE 22UAy.DE said they expect to seek U.S. emergency use authorization later this month. .N

"(The news) really exceeded everyone's best-case scenarios. There was growing nervousness that we might not get a strong vaccine result, so this unleashed the risk-on trade and for gold, signalled a massive exodus of safe-haven plays," said Edward Moya, senior market analyst at OANDA.

However, he added "the economy is still in need of much support and only 50 million (vaccine) doses will be available, so we're not in the clear with the virus and the calls for stimulus will be growing."

Bullion, a hedge against currency debasement and inflation, has climbed 22% this year, mainly driven by unprecedented global pandemic-led stimulus.

"If you think that you're living in the best of all worlds, then you don't need gold," said Commerzbank (DE:CBKG) analyst Daniel Briesemann.

"However, this assessment seems to be premature. And we've often seen in the past that at prices below $1,900, buying interest will come into the market - we would expect that to happen again this time."

Other precious metals also sold off, with silver XAG= sliding 7.3% to $23.73 per ounce, platinum XPT= falling 2.9% to $863.02 and palladium XPD= shedding 0.7% to $2,474.51.

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