Gold Gains as US Stimulus, Vaccine Rollout Challenges Surface
Arslan Butt • 1 min read
Gold prices are climbing up on Wednesday as markets turn their focus away from the optimism surrounding the COVID-19 vaccine from Pfizer and towards hopes for more fiscal stimulus measures from the US. At the time of writing, GOLD is trading at a little above $1,880.
News about Pfizer’s vaccine against COVID-19 having an efficiency of more than 90% had boosted the risk sentiment in global markets and weakened the safe haven appeal of gold since Monday. However, after the initial cheer about the progress towards a vaccine, traders are now concerned about how its rollout and distribution will happen.
Meanwhile, the yellow metal enjoys support amid increasing expectations for the US to unleash more fiscal stimulus measures to prop up its economy. With the number of fresh infections and hospitalizations increasing across the US as winter approaches, the need for more stimulus is also on the rise. Gold benefits whenever more stimulus measures are announced as it signals a weakness in the economy.
Gold prices are also supported by a weakness in the US dollar, which had previously made gains due to the news about the vaccine. As markets turn their attention towards how the vaccine will be produced and rolled out, the dollar has slid lower, and helped the precious metal prices strengthen as a result.