Gold slides the most in 3 months as encouraging vaccine data boosts risk appetites
- Gold prices sank as much as 5.2% on Monday as Pfizer's vaccine update hinted the coronavirus pandemic may be contained earlier than anticipated.
- The pharmaceutical giant said Monday it's experimental coronavirus vaccine was more than 90% effective at preventing COVID-19 in trial patients.
- The news drove stock indexes to record highs as investors increased bets on a near-term economic rebound.
- Safe havens including
goldand Treasurys plunged as investors shifted cash out of the popular hedge assets.
- Watch gold trade live here.
The pharmaceutical giant announced Monday morning that its experimental coronavirus vaccine was more than 90% effective at preventing COVID-19 in trial participants. The news pushed major stock indexes to record highs and fueled a similarly strong shift away from safe havens.With a viable vaccine reviving hopes for a complete economic recovery and containment of the virus, investors focused their bets on value stocks and cyclical industries. Bullion tumbled below its key $1,900-per-ounce support level to an intraday low of $1,850.51 per ounce. Treasurys, another popular safe-haven asset, also fell.
Gold prices typically rise in times of uncertainty or when investors seek to hedge against an economic downturn. The precious metal was recently bolstered by the Federal Reserve signaling it will hold rates near zero through 2024. Historically low rates diminish the opportunity cost of holding gold."Perhaps we're now seeing a bit of a reset moment for gold, where it's correlation with risk assets starts to fade and it returns to its traditional roots as a safe haven instrument," Craig Erlam, senior market analyst at Oanda Europe, said in a note, adding such a shift may be "a little premature."
Gold traded at $1,866.90 per ounce, up 29% year-to-date.
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