Gold prices crashed by $100 on Monday as a potential vaccine for coronavirus emerged. In a statement to markets US drugmaker Pfizer said its vaccine had a 90% success rate in a Phase 3 trial of over 40,000 patients.
Gold was strong last week with a move to $1950 and it looked like the precious metal would soon see a push to the $2000 level again. Presidential drama, a higher spending Democrat government and a weak U.S. dollar were all supporting the path higher for bullion. Yesterday’s announcement from Pfizer has taken the wind out of the metal’s sails and the price fell from the $1960s to the previous big support level at $1863.
Gold has been strong in the second half of the year due to the weakening dollar and the rash of stimulus spending being seen from governments and central banks around the world. This spending would’ve likely continued, alongside the damaging lockdowns, but the emergence of a vaccine has burst the bubble for gold.
There is still some risk from the contested U.S. election as the Trump campaign moves ahead with lawsuits. In a sign that things could change, CNN has already removed their projection for a Biden win in Arizona. We could still see some drama ahead with the Supreme Court having to get involved. If there was a swing to Trump then it could boost the U.S. dollar and that would also put pressure on gold as traders price in a more frugal Republican Presidency.
Gold Technical Outlook
The price of gold crashed from a move above $1960 to close at the important $1863 level, which provided a low in late-September and late-October. The price has bounced but there is a risk that it could fall further. A close below $1863 should see some follow-through to the downside, with the $1800 level being the next target. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.
Don’t miss a beat! Follow us on Telegram and Twitter.
Gold Daily Chart
More content
- Download our latest quarterly market outlook for our longer-term trade ideas.
- Follow Kevin on Twitter.
- Do you enjoy reading our updates? Become a member today and access all restricted content. It is free to join.