The current gold price momentum is not too impressive right now. Following recent COVID-19 vaccine news and investors increasing their exposure to riskier options, bullion is of less importance. This is evident when looking at the price, which is heading into much lower levels today.
Gold Price Keeps Trending Lower
It was expected there would be some pushback where the gold price is concerned. Multiple COVID-19 vaccines have been announced in recent weeks. All of them seem to have a high positivity rating, even though the long-term consequences of either vaccine remain uncertain. More importantly, the distribution of these vaccines will pose several logistical problems in the months to come.
Making matters even more interesting is the increasing risk exposure investors pursue today. Stocks are noting incredibly strong momentum, and speculators have begun to rebalance their portfolios. Additionally, Bitcoin is nearing its all-time high again, drawing even more attention away from gold and other precious metals.
As a result of these developments, the price of spot gold has dropped to the low $1,800 range again. Values like these haven’t been seen in a while, yet they may not offer support for much longer either. Judging by the price correction for gold futures, it is unlikely that the price will bounce back in the short term.
Optimism regarding the global economy, as well as the vaccine news, has a lot of people genuinely excited about the future. The year 2020 has been filled with misery and setbacks for most people. Any sign of hope will serve as a straw to grasp. Whether that is idle hope or a sign of improvements waiting to materialize, is impossible to determine at this time.
The Impact of Janet Yellen
One other contributing factor to keep in mind is Janet Yellen. More specifically, President-elect Joe Biden hints at how Yellen will be the next US Treasury secretary. For investors, this may be a rather positive sign. She is more likely to enforce fiscal action to address the current economic concerns due to COVID-19.
The Yellen news has not proven beneficial to the US Dollar, however. America’s national currency remains subdued across the FX markets, which is usually a catalyst for a higher gold price. This time around, the situation is clearly different, and precious metals face a lot of negative market pressure.
Despite the current momentum, the gold price is still up by nearly 20% in 2020. Holding on to these gains will prove very difficult, particularly if the current momentum intensifies globally. For now, it remains to be seen what the coming weeks and months will offer for all precious metals.