Gold dips as equities climb on vaccine cheer; stimulus hopes support

[BENGALURU] Gold prices eased on Wednesday as encouraging vaccine developments pushed investors towards riskier equities, although hopes for more US stimulus kept bullion near two-week highs hit in the previous session.

Spot gold fell 0.3 per cent to US$1,865.46 per ounce by 3.09am GMT, after hitting its highest since Nov 23 at US$1875.07 on Tuesday, while US gold futures eased 0.3 per cent to US$1,870.20.

"Gold still has some firepower from all the stimulus, despite the fact that the vaccines are being rolled out... (stimulus) will provide gold with a lot of tailwind going into the year-end," said ED&F Man Capital Markets analyst Edward Meir.

The Trump administration on Tuesday proposed a package worth US$916 billion including liability protections and state and local government aid, which leading Democrat and Republican lawmakers deemed as progress in the ongoing stimulus talks.

Gold is seen as a hedge against inflation that might result from the unprecedented stimulus pumped into the economy this year.

Buoying Asian shares to record highs, Johnson & Johnson said it could obtain late-stage trial results of a single-dose Covid-19 vaccine it is developing earlier than expected.

Pfizer cleared the next hurdle in the race for its emergency vaccine approval in the United States after a regulator released documents that raised no new issues about its safety or efficacy.

Stimulus measures will be key as it will weaken the US dollar and generate more liquidity that will move into gold, said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide.

Markets are hoping a stimulus will come through by next week and gold could move towards US$1,900 by the end of the year, he added.

Silver slipped 0.7 per cent to US$24.38 an ounce, while platinum rose 0.6 per cent to US$1,028.17 and palladium was up 0.1 per cent to US$2,311.87.

REUTERS