GOLD : Stimulus and Vaccine

(Mon, 14 Dec 2020). Gold prices extended losses on Monday after Pfizer received FDA approval for its coronavirus vaccine. US lawmakers plan to split the $908 bipartisan stimulus package into two parts, making it easier to strike a deal on Monday. SPDR Gold Trust (GLD) ETF saw redemptions outpacing subscriptions for 9 weeks in a row.

Gold prices extended losses on Monday as Pfizer received emergency use authorization from the FDA, paving the way for a gradual rollout of coronavirus vaccines in the US that aims to create ‘herd immunity’ within the next six months or so. Vaccine developments, alongside prospects for a faster pace of economic opening-up and less reliance on stimulus support, have been among the top factors weighing on gold prices recently.

On a separate note, US lawmakers have decided to split the $908 billion Covid relief package into two separate parts. A larger package of $748 billion, which includes small business loans, jobless benefits and vaccine distribution, has received wide support from House and Senate negotiators. The smaller $160 billion package, which covers key roadblocks such as state and local aid as well as liability protections, may struggle to get passed. In view of a possible partial deal, gold traders are probably unwinding some of their positions built earlier this month in anticipation of a full relief package.

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