Gold prices slump as Pfizer vaccine propels risk appetite
Gold prices shed more than two per cent today as Pfizer’s announcement that its Covid-19 vaccine was 90 per cent effective in trials lured investor appetite away from safe haven assets.
Spot gold slipped 2.2 per cent to $1,908.55 per ounce this afternoon, while US gold futures fell 2.3 per cent to $1,908.90, marking its biggest intraday drop since August.
The figures erased this morning’s gains, which saw spot gold boosted to its highest price since mid-September, driven by a weak US dollar amid hopes for more stimulus following Joe Biden’s presidential victory.
“Gold sunk as the market took the view that its safe-haven credentials were no longer required,” said Russ Mould, investment director ar AJ Bell.
“It’s important to consider that Pfizer’s update is not confirmation that the vaccine is safe for wide-scale deployment. It is still in the trial stage and more data is required. However, from a markets perspective this is the most encouraging news so far in the fight against Covid-19.”
The prospect of a vaccine electrified world markets this afternoon, with S&P 500 futures hitting a record high and tourism and travel shares soaring on hopes of a return to service.
Shares in Easyjet jumped 30 per cent to 692.4p following the news, while British Airways owner IAG’s share price was up 38.75 per cent at 143.75p and Ryanair’s stock rose 16.16 per cent to 15.49 per cent.
But investor flurry to high-risk stocks may not spell trouble for gold in the long-run, said Alexander Zumpfe, a precious metals trader at Heraeus.
“Interest rates will remain low to negative for the foreseeable future — this makes gold still attractive for investors,” he said.
Unprecedented stimulus and near-zero interest rates around the world have driven gold about 25 per cent higher this year, given its status as a hedge against currency inflation.
Elsewhere, silver slid 3.3 per cent to $24.74 per ounce, while platinum fell 1.4 per cent to $876.20.