Gold falls to 4-month low as vaccine hopes take centre stage

Gold slid to a four-month low on Tuesday, extending a sharp slide from the previous session, as optimism over the development of COVID-19 vaccines drove investors to riskier assets.

Spot gold was down 0.7pc at $1,823.58 per ounce at 1015 GMT, having earlier slid to its lowest since July 21 at $1,820.45. It slumped as much as 2.2pc on Monday.

U.S. gold futures dipped 0.9pc to $1,820.60.

European equities rose on a possible easing of COVID-19 curbs and progress on AstraZeneca's vaccine, which joined other major drugmakers to declare positive test results.

"We had news about the vaccine, saw yields moving higher in U.S., even the dollar went lower and gold is not profiting from that ... This is a very bad sign for gold and means there is an underlying weakness building up," said ABN Amro analyst Georgette Boele.

A break below crucial support of $1,800 would trigger further price declines, Boele added.

The dollar held close to a near three-month low, potentially making gold cheaper for those holding other currencies.

In another boost to risk sentiment, U.S. President-elect Joe Biden was given the go-ahead to begin his White House transition.

"The acknowledgement of Biden's victory from the Republicans is likely to reduce the risk of further tensions and represents a supportive element for stocks, while haven assets such as gold are suffering," ActivTrades' chief analyst, Carlo Alberto De Casa, said in a note.

But "despite the dominant risk-on scenario, central banks will still be forced to print a huge amount of money and this could revamp investors' interest for gold in the near future."

Gold is considered a hedge against inflation and currency debasement, likely to result from the unprecedented stimulus unleashed globally to fight the pandemic's economic toll.

Silver fell 0.9pc to $23.37 an ounce.

Platinum rose 1.1pc to $936.11, while palladium dropped 1pc to $2,331.06.