Gold Prices Set to Decline on Vaccine Shocks| Influencer Forex Analysis•Jasper Lo

The US drug company Pfizer announced that the vaccine developed against the Covid-19 appeared to be effective, which fluctuated the financial market wildly. Gold and crude oil staged strikingly different performance in commodity markets, with oil prices soaring at the expense of gold prices. The jump of oil prices in the short term is attributed to the rising oil demand stimulated by the revenge recovery in the aviation and tourism sector. But the slump of gold prices remains a mystery to which some investors have not yet found the key.

As early as August 11, gold prices also plummeted when Russia announced the registration of a new coronavirus vaccine. Thus the languish gold this time dragged by Pfizer's vaccine news is just a repeat of history. Ostensibly, the rising risk aversion punished gold in parallel with JPY and CHF. But in a deep sense, Pfizer‘s success in developing vaccines will significantly boost the US. The reason is quite simply: Americans are the first to receive the vaccine. It will largely accelerate the country’s economic recovery.

Pfizer's effective vaccine will give more impetus to the US economy that has already shown an outperformance. If the economic recovery sustains, the Fed may get prepared to exit the market and raise interest rates. Gold prices have a good chance to rebound both because the Feds reduction in printing paper dollars (market exit) will swell the greenback and because the risk aversion will be dampened. Notably, the new administration could enact legislation that substantially increases the minimum wage. It will lead to higher inflation and thus reach the inflation target set by the Fed, which is a chance for the US to enter the interest rate hike cycle early but will bring more pressure on gold prices.

For several times I have shared such an opinion that Buffett's purchase of gold mining stocks is not necessarily good for gold prices, but now both the Buffett and ordinary traders are on golds last train or even the wrong train. I firmly believe that besides the above factors, future announcements claimed by other heavyweight pharmaceutical companies worldwide on successfully developed vaccines will trigger the shakeout again in the gold market. At present, spot gold sees its major support standing at $1,848.45, where a breach below will pave the way to $1,703.2

[About The Author]

Since 1987, Jasper Lo has been engaged in the financial industry

(forex, futures and gold) for more than 32 years and holds forex R.O.,

securities and futures broker licenses. Mr Lo is an expert in trading

forex, precious metals and commodity futures and an basic and technical

analyst.

Over the years, Mr Lo won many individual and team sales champion

awards, as well as outstanding employee awards. He was invited, as a

guest mentor, to the University of Hong Kong, Guangdong Ocean University

and Guangzhou Jinan University. And he was also appointed as the chief

training consultant by Hantang Securities and Dongguan Securities in

China.

Mr Los experience as guest of honor invited by media including Chinese and English newspapers and columnist:

-Guest of honor invited by TVB New Channels such as Finance Channel, Forex Focus, Global Watch

-Guest of honor invited by Now Finance Channel - Forex Reports

-Guest of honor invited by i-CABLE Finance Info Channel - Forex Opportunities

-Guest of honor invited by ViuTV - Investor Smarter Group

-Columnist of Finance and Forex Market of Ming Pao

-Presenter of Finance and Forex Forecast of Ming Pao

-Presenter of Investment 36 Stratagem and Technical Analysis in 1 Min of Ming Bao Finance

-Appointed lecturer of Ming Pao Investment Seminar and Paid Course

-Author of the best seller Investment 36 Stratagem

-Columnist of Forex Expert, Forex Analyst, Marathon Weekly of ET Net

-Guest of honor of Open Good Morning of ET Net

-Guest of honor of Metro Finance Channel - Market Opening, Instant

Market Fighting, Guangdong-Hong Kong Finance, Finances Power, Market

Analysis

-Guest of honor of New Era of Investment of RTHK

-Columnist of Capital Commodities of Capital Weekly

-Guest Presenter of Wang Guanyi Online Finance Channel - Fund and Commercial Bond

-Columnist of Wealthub Finance and Investment Smart Platform of Enrich Culture

-Guest presenter of Weekly Investment in the World of Enrich Culture