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Gold prices drop amid COVID-19 vaccine optimism

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Gold prices rallied on Tuesday, after recording the worst month in four years.

Such poor showing in the month of November comes as no surprise, taking into account that global investors sold off their bullion assets and channeled the funds into riskier investments like global stocks and exchange-traded funds.

At the time of writing this report, the precious metal was trading at around $1787/ounce, For the month of November, the precious metal lost for the third consecutive week, dropping 6% in value, month to date.

What this means

Global investors are primarily reducing their bullish bias, taking into consideration the most recent testimony from U.S Treasury Secretary, Steve Mnuchin, and US Federal Reserve Chairman, Jerome Powell, on Monday to the Senate Banking Committee. Though both hinted that the world’s largest economy was on the path to recovery, they emphasized on the need for a lifeline.

In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, spoke on why the yellow metal could face more selling pressure in the coming weeks, taking into consideration, market sentiments that the future looks bright:

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“Flashing green lights at the end of the tunnel suggest investors should look through the immediate COVID-19 concerns and focus on the future, which seems incredibly bright and bullish. So, with month-end selling pressure mostly out of the way, it could allow investors to focus on those flashing green sectoral lights at the end of the Covid-19 tunnel.”

What to expect

Still, gold traders would be wary of taking bearish bets blindly, even when it looks like the tunnel’s end is in sight regarding the COVID-19 pandemic, on the bias that market conditions are not certain what the landscape will look like on the other side.

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