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Gold extends fall as investors shift to ‘risk on’ mode

· Gold fell to a four-month low on Tuesday and looked set to dip below the $1,800 psychological level as progress on COVID-19 vaccines and hopes for a quick transition in the White House drove investors towards riskier assets.

· Spot gold dropped 1.5% to $1,807.95 an ounce, after touching its lowest since July 17 at $1,800.01. U.S. gold futures settled down 1.8% at $1,804.60.

· “More optimism in regard to the economy, based on the vaccines has taken some of the safe haven status away from the gold market,” said David Meger, director of metals trading at High Ridge Futures.

“Less political concern moving forward” has also reduced the need for safe havens, Meger added.

· Wall Street’s main indexes jumped after Joe Biden moved closer to take the reins of power in January with a formal nod.

· “The game changer has been the ability of all the vaccines to show good promise,” said George Gero, managing director at RBC Wealth Management, adding it is going to be a long climb back up for gold under these circumstances.

· On Monday, safe-haven bullion lost 1.9% after another global drug company AstraZeneca announced promising trial results toward a vaccine.

· Also, Biden is expected to nominate former Federal Reserve Chair Janet Yellen as U.S. Treasury secretary, and investors see Yellen as a force for more fiscal action to combat the economic crisis unleashed by the pandemic.

· Gold’s slide also came despite a subdued dollar, which held close to a near three-month trough.

· Bullion, a hedge against currency debasement and inflation, has is still up about 19% this year, mainly driven by unprecedented pandemic-led global stimulus.

· Goldman, Citi see gold above $2,000 in 2021: ‘The bull market is not over’

Despite the upturn in the global economic outlook following multiple coronavirus vaccine breakthroughs, gold’s bullish cycle will continue, according to analysts at Citi and Goldman Sachs.

The traditional safe haven asset hit an all-time high in August of $2,074.88 per ounce, amid fears that the coronavirus crisis looked set to continue indefinitely.

However, demand for the precious metal has dwindled in recent weeks, as promising news from a number of Covid-19 vaccine producers have bolstered hopes that an end to the pandemic could be in sight. Spot gold was trading down over 1.7% at just under $1,805 per ounce during afternoon trade in Europe on Tuesday.

Despite this, analysts on Wall Street do not expect the downward trend to continue.

Citi Head of Commodities Research Aakash Doshi said in a note that he expected vaccine news to slow, but not end, gold’s secular bull cycle, suggesting it was “inevitable” for prices to revert back above $2,000 in 2021, as long as U.S. monetary policy did not take an unexpectedly hawkish turn. Gold last traded above this level in late August.

· Elsewhere, silver dipped 1.6% to $23.20 an ounce, platinum jumped 2.8% to $951.66 and palladium dropped 0.9% to $2,334.95.

· U.S. consumer confidence slips; house prices surge

U.S. consumer confidence fell more than expected in November amid a widespread resurgence in new COVID-19 infections and business restrictions, reinforcing expectations for a sharp slowdown in economic growth in the fourth quarter.

The consumer confidence index dropped to a reading of 96.1 this month from 101.4 in October. Economists polled by Reuters had forecast the index falling to a reading of 98 in November. The index was at 132.6 in February.

· Yellen would need Congress to approve use of clawed-back Fed loan funds, Treasury says

President-elect Joe Biden’s Treasury secretary will need Congress to approve re-use of $455 billion in funds that the Trump administration is taking back from Federal Reserve and other pandemic lending programs, the Treasury said on Monday.

· NY Fed's Williams: Emergency lending programs could be started if needed – WSJ

The emergency lending facilities set up by the Federal Reserve to stabilize markets in the spring were successful and could be restarted later if needed after they expire at year end, New York Federal Reserve Bank President John Williams said on Tuesday.

· Fed's Bullard sees 'light at the end of the tunnel'

St. Louis Federal Reserve President James Bullard on Tuesday said recent developments regarding the success of several coronavirus vaccine candidates suggests an end to the health and economic crisis may be coming into view.

· Biden’s foreign policy team lays out a national security vision that differs sharply from Trump’s

“Diplomacy is back,” and America will be “a country of welcome.”

· Biden to begin receiving classified presidential daily briefings

“Following the statutory direction of the Presidential Transition Act, ODNI will provide requested support to the transition team,” said the spokesman. “This afternoon the White House approved ODNI to move forward with providing the PDB as part of the support to the transition.”

· White House approves intelligence brief for Biden

· Pompeo says U.S. State Department transition process begun

· Pennsylvania officials ask court to reject Trump campaign's election appeal

· COVID-19 Updates:

· France's Macron eyes COVID-19 vaccination starting by year-end

French President Emmanuel Macron said on Tuesday a vaccine to prevent COVID-19, the illness caused by the novel coronavirus, could start being administered as soon as the end of the year in France if approved by regulators.

· Russia plans to produce 1 billion doses of its ‘cheaper’ Covid vaccine

“The cost of one dose of the Sputnik V vaccine for international markets will be less than $10,” Russia’s sovereign wealth fund (RDIF) said on Tuesday. Russia’s coronavirus vaccine requires two doses.

“Thus, Sputnik V will be two or more times cheaper than foreign vaccines based on mRNA technology with similar efficacy rates. For Russian citizens, vaccination with Sputnik V will be free of charge,” RDIF added.

It has since shared its first interim analysis of phase three trials, and on Tuesday published the second interim analysis of trial data. It said the results showed the vaccine had a 91.4% efficacy at preventing coronavirus infection after 28 days, and was over 95% effective after 42 days.

RDIF reiterated on Tuesday that its trial results would be published by the country’s Gamaleya Center team “in one of the leading international peer-reviewed medical journals” but did not specify a time frame for that. It added that after the completion of phase three clinical trials, it would provide access to the full clinical trial report.

· German states plan to relax virus rules for Christmas

· UK’s four nations agree to relax Covid restrictions for Christmas

The four nations of the United Kingdom have agreed to relax Covid-19 restrictions for Christmas to allow up to three households to meet at home for five days.

England, Scotland, Wales and Northern Ireland have taken differing approaches to handling the pandemic so far but the leaders of the devolved nations reached agreement with London on Tuesday on rules governing the festive period.

Three households will be able to form a “Christmas bubble”, allowing them to meet up at home, places of worship and in outdoor public places but not at indoor hospitality or entertainment venues from Dec. 23 until Dec. 27 under the plans.

· UK to spend four billion pounds to push long-term unemployed into work

· EU needs to move too for Brexit deal: UK's Gove

· Spain's PM sees EU deal to unblock budget, recovery funds by year-end

Spanish Prime Minister Pedro Sanchez said on Tuesday he was confident the European Union would find a solution by year-end to overcome opposition from Hungary and Poland to the adoption of the 2021-2027 budget and recovery package.

· Dow Jones hits 30,000 as Wall Street bets on 2021 bounce

The Dow Jones Industrial Average breached the 30,000-mark for the first time on Tuesday, as optimism that COVID-19 vaccines will open the way to economic recovery next year fueled Wall Street’s rebound from a pandemic-driven crash this year.

· Thai police to charge protest leaders with royal insult

Thai police on Tuesday summoned seven leaders of anti-government protests to face charges of insulting the monarchy, a day before a planned demonstration to demand that the king give up control of the royal fortune, a police source and a rights group said.

Reference: CNBC, Reuters, Worldometers