Gold drifts lower as vaccine optimism, Asia-Pacific trade deal erode safe-haven appeal

GOLD spent most of the week drifting lower as a number of bearish fundamental drivers eroded the safe-haven status of the precious metal. Gold futures had earlier in the week reacted negatively to the announcement by Pfizer and BioNTech about progress in developing a vaccine to combat the Covid-19 pandemic. Gold was also pressured by the signing of the Asia-Pacific trade deal, which increased positive sentiment on trade in the Asia-Pacific region but reduced demand for gold as a safe haven.

Euphoria surrounding a Covid-19 vaccine has begun to fade this week - a potentially effective vaccine would not be readily available until after the Northern Hemisphere winter. This provided some measure of support for gold. Meanwhile, the number of Covid-19 cases continues to grow unabated in Europe and the US with more restrictions on travel implemented, which provided some support for the precious metal. Central bankers warned that the pandemic is spreading in many parts of the world and that continued fiscal and central bank support would be needed.

What should investors look out for in the longer term?