Covid Vaccine Could Spell Trouble for Gold Markets

January 7, 2021 James Heinsman Hedge Fund News

Vaccines against the Covid-19 virus are predicted to be a bonanza for pharmaceutical giants Pfizer (NYSE:PFE) , Moderna Moderna (NASDAQ:MRNA) and Oxford University/AstraZeneca (LON, NASDAQ: AZN), and there is virtually no way to measure the impact the trio of vaccines will have on most global industries.

The gold market could be the notable exception. After hitting a record high of US$2,067.15 per ounce on August 7, 2020, the precious metal closed on January 6, 2021 at US $1906.90, a drop of 7.75 percent. In addition, the Royal Bank of Canada slashed its annual forecast for gold to $1,810 per ounce from $1,893.

In addition, Reuters reported a spike in short trades vis-à-vis the gold market at the end of 2020, with Barrick Gold bolstering its trade volume from 14.9% to 24.8% for the second half of the month.

The report also said that competitors Newmont Corp moved from 8.8% to 11.4%, from 8.8%, over the same period, while trades in Kinross Gold rose to 20.6%, from 18.2%.

Precious metals are seen as an accurate benchmark to measure macroeconomic trends. As tangible asset, many investors see them as a safe investment during periods of economic uncertainty. During pandemic-ravaged 2020, gold provided security and stability as volatile industries such as travel and sports struggled.

Now, as hope grows that the vaccines will allow a resumption of normal commerce and trade, many investors are likely to be more willing to trade the security of gold for the potential of higher returns in other sectors.

“While we are by no means out of the woods in our view, the light at the end of the tunnel means that gold markets should begin to see an unwind of the trends that became quite exaggerated over the course of 2020,” Royal Bank of Canada analysts told Reuters.

covid, Finance, Gold, Investment, markets,

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