Jakarta, CNBC Indonesia – World gold prices collapsed again ahead of the opening of the United States (US) trading session on Tuesday (11/24/2020), almost breaking through US $ 1,800 / troy ounce. This precious metal has been slumping since early last week, under pressure from the development of the corona virus vaccine and good news from the political dynamics in the US.
At 18:15 WIB, world gold prices dropped 1.42% to US $ 1,809.8 / troy ounce on the spot market, according to Refinitiv data. This level is the lowest since last July 20.
Yesterday, world gold prices slumped 1.85% to US $ 1,835.85 / troy ounce, under pressure due to developments in the corona virus vaccine and slick US economic data.
After the pharmaceutical companies from the United States, Pfizer and Moderna, which claimed their vaccines were effective in overcoming the corona virus by more than 90%, now it is the turn of British pharmaceutical company AstraZeneca to report that their vaccines are around 90% effective without causing serious side effects.
The more vaccines that are claimed to be successful in overcoming the corona virus will certainly make life return to normal faster. As a result, the attraction of gold as a safe asset (safe haven) dimmed.
In addition, economic data from the US also showed a surprise. The expansion of the manufacturing sector is actually increasing even though Uncle Sam’s country is experiencing a surge in cases of the corona virus disease (Covid-19).
Markit reports, purchasing managers’ index (PMI) for manufacturing this month soared to 56.7 from 53.4 the previous month.
The manufacturing PMI uses 50 as the threshold, above which means expansion, while below 50 means contraction.
The surprising expansion of the US manufacturing sector, as well as the development of a coronavirus vaccine, mean that the possibility of fiscal stimulus will not be as big as previously expected.
Fiscal stimulus is one of the “fuels” for gold to strengthen, if its value is small, of course this precious metal will become less powerful.
Other good news coming from the US, President Donald Trump has finally opened the door on the transition to President-elect Joe Biden’s administration. The US Public Service Administration (GSA) finally opened up federal resources for the transition after the blockade for weeks, Monday (23/11/2020) evening local time.
This is a big surprise. Even Trump, still rejecting Biden’s victory, acknowledged it was time for the GSA to “do what needs to be done”.
“Today’s decision is a necessary step to begin addressing the challenges facing our nation, including controlling the pandemic and our economy getting back on track,” said US president-elect Joseph ‘Joe’ Biden’s transition team in a statement. CNBC International, Tuesday (24/11/2020).
In addition, Biden, who showed former chairman of The Federal Reserve (The Fed), Janet Yellen, as finance minister, was also welcomed by market players and returned to channeling his investment into riskier assets. The price of gold is getting depressed.
Market participants believe that the 74-year-old woman will focus on fixing the economy, and not get involved in political problems. In addition, Yellen is also not expected to make new regulations for banking, which previously made market players anxious.
Yellen is the first woman Fed chairman, and will also become the first woman finance minister in the US.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)
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