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Gold Reverses After Drug Tests Give Hope for Quick Economic Rebound

Published 05/18/2020, 11:47 AM
Updated 05/18/2020, 11:52 AM
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com -- Gold prices fell on Monday as risk appetite returned to global markets on the back of positive preliminary test results from an experimental drug designed to fight the Covid-19 virus, while comments from senior U.S. officials over the weekend had mixed effects.

Bullion had started the day by hitting a fresh seven-year high of $1,775.40 a troy ounce after Federal Reserve Chairman Jerome Powell indicated that there was potential still for much more monetary stimulus to support the economy – even though he again dismissed the idea of pushing official interest rates below zero.

However, prices reversed sharply after biotech company Moderna (NASDAQ:MRNA) said its experimental vaccine for treating Covid-19 had succeeded in producing antibodies in all 45 patients in a small sample of its efficiency.

The speed with which a vaccine against the Covid-19 virus can be developed and distributed is the key variable in determining the speed and strength of the global economic recovery. Powell told CBS on Sunday that consumers were unlikely to fully regain the desire to go out and spend until they were confident that the infection risks were contained.

By 11:45 AM ET (1545 GMT), gold futures for delivery on the Comex exchange were down 1.1% at $1,737.30 a troy ounce, while spot gold was down 0.5% at $1,734.38.

Silver futures, however, continued their advance, protected by their exposure to the industrial cycle. They rose as far as $17.98 an ounce – their highest since early March, before retracing to be up 2.9% at $17.40.

Platinum futures likewise rose 6.4% and palladium futures posted their best day in months, rising over 10% to trade over $2,000 for the first time in three weeks.

The platinum group metals were helped by the resumption of production at the big three automakers in Detroit and elsewhere, marking the end of a fallow period in which there had been effectively no industrial demand for the metals.

Latest comments

Many people around the world get used to live with Covid-19 pandemic. People lose their jobs and canceled the expenditures. The consumer spending is depressed. On the other side of the coin, as soon as the pandemi relieves consumer spending is going to be skyrocketted., which will send very positive gains for corporations. The worst has been seen in economies and all around the world the business slowly starts again. I think the value of the gold slowly dimish as many companies back on their track very soon and gold will lose ground.Just to remind you the news about Ali-Baba, the news said that the orders reach at pre-pandemi level. There is no point in collerating funding the financial markets and the value of gold. If there is no need to prefer gold, money suply does not make any difference. Learn lessons from the crude price movemenst....  I think now it is time for bears take over on GOld and the price to fall on pre-pandemi levels. Be cautious on long trades...
lower price in gold is just an opportunity to buy in dip
Traders are selling gold on this news, investors are buying due to permanently low interest rates and money printing across the developed world.
Hope and fear. That’s what pushes market. Not facts. Some says boe and we all buy. Another says bah and we all sell. Actual facts don’t change. Here’s one for you. Any vaccine will take 6 months to produce. Best case scenario. So if you are selling gold on this news, you must be day trading or you should stop trading all at once 🤓
Reversed alright. One dollar is equal to 1/1730 the of an ounce of Gold
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