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Risk-on Sentiment Weakens Safe Haven Appeal of Gold

Gold prices have weakened and are trading bearish as the risk appetite in the markets receives a boost from promising news reports about possible vaccines against COVID-19. At the time of writing, GOLD is trading at a little above $,1803.

The safe haven appeal of gold has diminished significantly in recent sessions as three pharmaceutical companies announced effective vaccines that could put an end to the coronavirus pandemic in the coming months. Traders are cheering the possibility of economic recovery to begin once the vaccines start rolling out around the world, sending risk assets higher.

Gold has also come under pressure after uncertainty around the US presidential elections receded and President elect Joe Biden and his team begin the process of transition into the White House. On Monday, President Donald Trump gave GSA approval to start the transition of power to Biden so he can start receiving daily intelligence briefings.

However, losses in gold remain limited as the US dollar also trades weakly due to the improvement in the risk appetite in global markets. As we know, the precious metal shares a negative correlation with the greenback and makes gains when the reserve currency weakens, as it becomes more affordable for holders of other currencies to buy bullion.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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