Gold slips from 2-week high as equities climb on vaccine cheer

Gold prices slipped from a two-week peak on Wednesday as encouraging coronavirus vaccine developments pushed investors toward riskier equities, with global shares rising to a record high.

Spot gold fell 0.7% to $1,858.80 per ounce by 0600 GMT, after hitting its highest since Nov. 23 at $1875.07 on Tuesday, while US gold futures fell 0.6% to $1,864.00 per ounce.

"Market action across global markets is swinging between vaccine driven optimism and hopes for US fiscal stimulus...so risk sentiment is positive," said Harshal Barot, a senior research consultant for South Asia at Metals Focus.

Global equities traded higher on Wednesday after Britain started mass-vaccinating its people using a fully-tested shot and Johnson & Johnson said it could obtain late-stage vaccine trial results earlier than expected.

Gold is much better placed to weather any vaccine-related news and remains a buy on dips trade, Jeffrey Halley, a senior market analyst at OANDA, said.

US President Donald Trump's administration proposed a $916 billion aid package, while Congressional lawmakers were still working on resolving differences on the inclusion of business liability protections and state and local government aid.

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

Investors also looked forward to the US Federal Reserve two-day policy meeting next week for clues on the direction monetary policy is likely to take.

"A dovish FOMC, particularly in the scenario where they look to cap rates in the longer end of the US yield curve, should relight the gold rally," OANDA's Halley said.