Gold price dropped $100, or 4.5% on Monday as Pfizer announced that its COVID-19 vaccine is 90% effective. The S&P 500 climbed 2.9%, the Dow is up 3.8%, and the NASDAQ is up only 1%, dragged down by companies that benefit from the work from home culture, like Zoom (-12%) and Netflix (-4%).
Peter Hug, global trading director of Kitco Metals, said that these moves factor in expectations that are a bit ‘premature’.
“I think what the metals markets specifically are thinking, I think is premature, is that now with the vaccine coming out, the economy is going to re-open and there’s going to be a resurgence and another stimulus package is not necessary, and on that point I totally disagree,” Hug said.
Hug noted that he is looking for bearish momentum to test gold’s support level of $1,850 an ounce.
“This kind of momentum could feed on itself as stop losses are triggered and people get called on margin that were long this position. There might still be some selling in this market, I’m hoping for a bounce at $1,850, but if we lose that, I think $1,825 is a given in the short-term,” he said.
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