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Gold price sinks on more promising Covid vaccine news

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(Kitco News) - Gold and silver futures prices are lower in early U.S. trading Monday and lost modest overnight gains on news just out that another drug firm has a very positive outcome on a Covid-19 vaccine trial. Risk appetite has up-ticked early this week, evidenced by rallying stock markets and rising government bond yields. Both metals have moved up from their daily lows that were established right after the vaccine news hit the media outlets. December gold futures were last down $11.20 at $1,874.90 and December Comex silver was last down $0.385 at $24.39 an ounce.

Moderna this morning announced very good results in its third stage of a vaccine trial. Moderna’s vaccine is deemed at 94.5% effective and it only requires refrigeration of the vaccine, and not the extreme cold needed to keep Pfizer’s vaccine. The U.S. presently has 11 million Covid-19 cases and many hospitals are full or nearly full.

Global stock markets were mostly higher overnight, while the Dow and S&P 500 stock indexes are pointed toward solidly higher openings when the New York day session begins. The global markets are still pricing in the news of Covid-19 vaccines that will likely come on line for the general public in the coming few months, and then followed by a likely very rapid increase in economic growth in major countries hit hard by the pandemic.

U.S. markets were also assuaged by weekend reports the incoming Biden administration is not planning to impose a national lockdown on the U.S. economy.

Asian shares were boosted in part on a trade deal signed by China, Japan, South Korea and 12 other countries, who produce one-third of global GDP.

In other overnight news, China got some more upbeat economic data as its industrial output in October rose 6.9%, year-on-year. Fixed-asset investment rose 1.8% in the January-October period, and retail sales were up 4.3% in October. China’s unemployment rate in October came in at 5.3%. China’s authoritarian regime was able to lock down the entire population early this year, to tamp down Covid-19, and its economy is now reaping the benefits. That compares to the democracies in the U.S. and Europe that were not able to completely control their populations and whose economies continue to struggle as Covid infections are in a steep ascent.

The U.S. dollar index is near steady early today. The other important outside market sees crude oil prices solidly higher and trading around $42.00 a barrel. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.9%.

U.S. economic data due for release Monday is light and includes the Empire State manufacturing survey.

Live 24 hours gold chart [Kitco Inc.]

Technically, the December gold futures bulls still have the overall near-term technical advantage but trading has been choppy. A minor bear flag pattern has formed on the daily bar chart. Bulls’ next upside price objective is to produce a close in December futures above solid resistance at the November high of $1,966.10. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the November low of $1,848.00. First resistance is seen at $1,890.00 and then at $1,900.00. First support is seen at the overnight low of $1,861.50 and then at $1,848.00. Wyckoff's Market Rating: 6.5

Live 24 hours silver chart [ Kitco Inc. ]

December silver futures bulls have the overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at $27.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the October low of $22.625. First resistance is seen at the overnight high of $25.155 and then at $25.50. Next support is seen at the overnight low of $24.26 and then at $24.00. Wyckoff's Market Rating: 6.5.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.