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Gold prices on track for lowest finish in nearly 2 weeks on U.S. coronavirus vaccine rollout

Gold futures fell Monday morning as a rollout of the a COVID-19 vaccine in the U.S. and doubts about another round of relief aid out of Congress put the precious metal on track to mark its lowest settlement since the start of the month.

Gold’s slide comes ahead of the last meeting of the year for the Federal Reserve, which could also serve as a catalyst for commodities and financial markets broadly.

Higher equities and strength in most physical commodities point to a risk-on session, “putting gold and silver in a liquidation track,” analysts at Zaner Metals wrote in a daily report. Market action is “clearly respecting flight to quality lines” with Treasurys, gold, and the dollar all under pressure “because of what is likely residual optimism from the beginning of vaccinations.”

February gold 
GCG21,
-0.79%

was off $13.70, or 0.7%, at $1,829.9 an ounce after edging up by 0.2% last week. A settlement around this level would be the lowest for a most-active contract since Dec. 1, FactSet data show.

March silver 
SIH21,
-0.32%

 traded up 9.3 cents, 0.4%, at $24.185 an ounce, following a weekly skid of 0.7%.

Weakness in the dollar Monday, off 0.2%, as measured by the ICE U.S. Dollar Index DXY, may help to cap the downside for precious metals priced in the U.S. unit.

Pfizer Inc. 
PFE,
-2.81%

over the weekend began shipping the vaccine it created with German partner BioNTech SE
BNTX,
-7.22%
,
after the Food and Drug Administration late Friday granted emergency authorization for its use in the U.S.

Separately, The Wall Street Journal reported that Senate and House lawmakers are nearing a compromise on coronavirus fiscal aid that strips out $160 billion of state and local aid and liability protections into a separate package, to achieve a deal before year-end. There are still doubts about a pact coming to fruition.

Investors also are watching Brexit developments after U.K. Prime Minister Boris Johnson and European Commission President Ursula von der Leyen agreed on Sunday to scrap a deadline and go “the extra mile” to reach a post-Brexit trade deal.

Over in the U.S., the Fed will make its monetary policy announcement Wednesday.

The bottom
line is that the market does expect something more” from the central bank, analysts
at Sevens Report Research wrote in Monday’s latest newsletter. That doesn’t
mean more quantitative easing, but “it does mean some sort of effort to
increase accommodation, either actually or verbally.”

“If the FOMC does nothing and merely states it is happy with the current policy stance, that will be a “not dovish enough” disappointment for markets, especially in light of the lack of progress on stimulus—and that will be a headwind on stocks,” they said. That would dull investment demand in gold.

Among other metals Monday, March copper
HGH21,
-0.14%

shed nearly 0.4% to $3.516 a pound. January platinum
PLF21,
-0.74%

lost 0.7% to $1,015.10 an ounce and March palladium
PAH21,
-0.78%

traded 0.8% lower at $2,315 an ounce.

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