NEW YORK: Gold slumped 2%, breaking below the key $1,800 support level to a near five-month trough on Friday, as growing optimism about a quick vaccine-fuelled economic recovery and a smooth White House transition powered US equities to records. Spot gold slid 1.3% to $1,787.46 per ounce by 1:15 pm EST (1815 GMT), earlier falling to its lowest since July 6 at $1,773.10 an ounce.
The metal has shed about 4.5% so far this week, the most since the week of Sept. 25. US gold futures settled down 1.3% at $1,781.90 per ounce.
"As soon as prices touched below the key $1,800 level, it triggered a sell-off. It is probable that prices might test the $1,750 level given we have a strong fundamental reason like the vaccine," said OANDA analyst Craig Erlam.
Further weighing on gold, US equities raced to a record on the vaccine optimism and as investors bet on calmer global trade under a Joe Biden administration in the United States.
"It is believed that Biden will take a calmer approach towards trade with other countries like China and that is getting reflected in the stock market," said Natixis analyst Bernard Dahdah.
US President Donald Trump said on Thursday that if the Electoral College votes for Biden, he will leave the White House, paving the way for Biden to formally take up the presidency. "However, with ultra-low interest rates and prospects of more stimulus in the economy, gold looks robust in the longer term," Dahdah said.
The economic impact of the Covid-19 pandemic has led global central banks to keep interest rates at a minimum. In other metals, silver dropped 3.5% to $22.63 per ounce and has fallen 6.4% so far this week. Platinum rose 0.2% to $963.45 and palladium gained 1.6% to $2,420.18.
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