Gold fell sharply on Wednesday morning in Asia, continuing losses from the previous sessions in North America and Europe.
Gold futures slid 2.52% to $1,897.20 by 11:57 PM ET (4:57 AM GMT). The pullback was not altogether unexpected, with analysts expecting a correction after the per-ounce price of the yellow metal topped $2,000 dollars.
The turnaround came as appetite for risk assets recovered thanks to a stronger dollar and real rates. The greenback is up today, continuing to move away from two-year lows.
“The rally is now giving up some of these gains as these drivers lose momentum. Real rates are now rising along with nominal yields due to stimulus optimism and risk appetite, with the USD also off its lows,” TD Securities head of global strategy Bart Melek said in a note.
The move towards riskier assets has been partly fueled by optimism that the U.S. may be moving closer to a new stimulus package. U.S. President Donald Trump also announced yesterday that he is “seriously” considering a capital gains tax cut.
Meanwhile, Russian President Vladimir Putin announced yesterday that a locally developed vaccine for COVID-19, Sputnik-V, has been given regulatory approval and is ready for use. Russian Health Minister Mikhail Murashko said on Tuesday that the vaccine had “proven to be highly effective and safe”, with mass vaccination planned to start in October.
But health regulators elsewhere have cast doubts on the vaccine, as it has not yet gone through safety trials and Russia did not offer any scientific evidence of the vaccine’s effectiveness and safety.