Gold dips below $US1,900/oz on COVID-19 vaccine optimism, then bounces
Link copied to
Investors took flight from gold and piled into stocks, causing the safe haven asset to plummet 5.3 per cent overnight to around $US1,855 per ounce – its largest one-day fall in seven years.
The yellow metal later recovered to $US1,882/oz ($2,585/oz) in Tuesday trade.
Reports of some success in stage three clinical trials for a COVID-19 vaccine was enough for some investors to exit gold for risk-on assets like stocks.
“Basically, we are seeing an unwind of the trade we have been building up to for the last six months,” Saxo Bank’s head of commodity strategy, Ole Hansen told Kitco news.
He added there was still plenty of uncertainty to support gold prices, and it would take time for economies to recover from the blow dealt by COVID-19.
“A vaccine is positive news, but it doesn’t change the narrative,” Hansen added.
US equities had a good day Monday, surging up to 2.95 per cent on reports that Pfizer and its Germany-based partner BioNTech had developed a vaccine that had proved effective for COVID-19 in 90 per cent of cases.
The COVID-19 virus has been linked to 1.2 million deaths worldwide and 50.7 million people have contracted the illness, according to reports.
“We have often seen in the past that at prices below $US1,900/oz, buying interest will come into the market – we should expect that to happen again this time,” Commerzbank analyst, Daniel Briesmann told Reuters.
Unprecedented economic stimulus from central banks and governments, including a planned $US2 trillion package stuck in the US Congress, is likely to support gold prices, analysts said.
Gold is still up for the year to date, and was trading at $US1,520/oz in January.
The US dollar index, measuring the currency against a basket of others, was at 92.50 and its lowest since May 2018, which may cushion gold prices.
Several ASX gold companies issued either exploration results or progress reports on gold projects during Tuesday.
Antilles Gold (ASX:AAU) issued a progress report on its La Demajagua gold-silver project in Cuba, a joint venture with the government of Cuba.
GeoMinera, the Cuban government’s mining company, has a 51 per cent stake in the La Demajagua project and Antilles Gold has 49 per cent.
Antilles Gold is proposing an 800,000 tonnes per annum open pit mine for the project on an island off Cuba that includes the historic Delita gold mine that closed in 1985.
The joint venture company for the project, Minera La Victoria, was registered with the Cuban government in August.
It will undertake feasibility studies for the proposed mine over the next 18 to 20 months, and there are plans for a 100,000tpa concentrate processing plant either at La Demajgua or in the Dominican Republic.
A Cuban drilling contractor will start a 25,000m drilling program in early 2021.
Antilles Gold was formerly known as PanTerra Gold.
Two major new anomalies have been discovered with dimensions of up to 1,500m by 500m along the Mbengué shear zone, and within 25 km of Barrick Gold’s Tongon gold mine.
QX Resources (ASX:QXR) has identified a 675m-long gold anomaly, named Red Dog, following a soil survey on its Disney tenement at its Clermont gold project in central Queensland.
“This is indeed an exciting result for QX Resources as it delivers a clear target for further development with the next step being trenching and drilling,” director Roger Jackson said.
The Belyando and Lucky Break mines on the project produced 93,000 ounces of gold in 1980s to 1990s.