Gold slumps over 2pc as vaccines spark economic optimism
- Silver falls as much as 4%.
- Health Canada approves Pfizer and BioNTech's COVID-19 vaccine.
Gold retreated more than 2% on Wednesday as optimism driven by more progress on the COVID-19 vaccine front bolstered hopes for a smoother economic recovery.
Spot gold was down 2.4% at $1,827.26 per ounce by 2:01 p.m. EST (1901 GMT). On Tuesday, gold hit its highest since Nov. 23 at $1,875.07.
US gold futures settled down 1.9% at $1,838.50.
"There is the anticipation that some of the chaos that has resulted from the pandemic is going to subside (now that) they are beginning to disperse the vaccine in some parts of the world," said Jeffrey Sica, founder of Circle Squared Alternative Investments.
Canada on Wednesday approved Pfizer and BioNTech's COVID-19 vaccine, a day after Britain became the first Western nation to start a mass vaccination drive.
Gold was also pressured by an uptick in the dollar.
But the metal, considered a hedge against potential inflation, was still up more than 20% for the year, underpinned by hopes of more fiscal stimulus.
With the pandemic roaring back to levels surpassing those seen early in the crisis, lawmakers in the United States made attempts to hammer out an agreement on a new fiscal support package.
Liquidation of gold exchange traded funds posed the biggest threat to gold prices, and central demand has been weaker, HSBC analyst James Steel said in a note, cutting the bank's 2021 price forecast by 3% to $1,907.
But while gold's rally has been blunted by the vaccine news, bullion remains supported by accommodative monetary and fiscal policies and geopolitical risks, the bank added.
Investors are now awaiting on policy cues from the US Federal Reserve's two-day meeting next week.
A dovish FOMC should "relight the gold rally," said Jeffrey Halley, a senior market analyst at OANDA.
Silver slipped 3.8% to $23.64 per ounce, platinum fell 2.9% to $993.23 and palladium was down 1.3% at $2,280.92.
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