Gold drops in two consecutive days, as hope raises over Covid-19 vaccine

Gold was down for the second day in a row on Tuesday morning in London’s trading session, even after a falling dollar made gold slightly cheaper for investors holding other currencies.

Gold futures fell by 1.67% to $1,706.45 by 4 pm local time, with global investors retreating from the pullback from gold after hopes were strengthened on Novavax’s Covid-19 vaccine. The biotechnology company is preparing to present results from its phase one clinical trial of its vaccine by July. Based on these, phase 2 trials will begin in many countries, including America.

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Investor sentiment was also boosted by Japan, the third-largest economy in the world, as it lifted its state of emergency which included regions like Tokyo. However, the number of Covid-19 cases continues to climb, and U.S.-China relations continue to simmer in the background.

Furthermore, global investors will look to U.S. Federal Reserve Chair, Jerome Powell’s, statements during a scheduled virtual meeting on Friday for tips of whether the Federal Reserve will consider negative rates.

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“US-China tensions have also fueled concerns about the implementation of a trade deal. Gold’s rally is showing signs of exhaustion amid relative calm in equity markets. However, buying interest may emerge at lower levels amid growth worries and US-China tensions,” Kotak Securities said in a recent note.