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PRECIOUS-Gold slips from 2-week high as equities climb on vaccine optimism

Published 09-12-2020, 09:06 am
Updated 09-12-2020, 02:00 pm
© Reuters.

(Updates prices)

* Dovish Fed could re-ignite gold rally- analyst

* J&J vaccine could obtain late-stage trial results

* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa

By Nakul Iyer

Dec 9 (Reuters) - Gold prices retreated from a two-week peak on Wednesday as positive coronavirus vaccines developments encouraged investors to move into higher-risk assets, sending world shares to a record high.

Spot gold XAU= fell 0.7% to $1,858.70 per ounce by 0759 GMT, after hitting its highest since Nov. 23 at $1,875.07 on Tuesday, while U.S. gold futures GCv1 fell 0.5% to $1,864.80.

"Market action across global markets is swinging between vaccine driven optimism and hopes for U.S. fiscal stimulus... so risk sentiment is positive," said Harshal Barot, a senior research consultant for South Asia at Metals Focus.

Global equities rose on Wednesday after Britain became the first Western country to begin a major vaccination campaign and Johnson & Johnson (NYSE:JNJ) JNJ.N said it could obtain late-stage vaccine trial results earlier than expected. MKTS/GLOB is much better placed to weather any vaccine-related news and remains a buy on dips trade, Jeffrey Halley, a senior market analyst at OANDA, said.

U.S. President Donald Trump's administration proposed a $916 billion aid package, while Congressional lawmakers were still working on resolving differences on the inclusion of business liability protections and state and local government aid. measures will be key as they will weaken the dollar and generate more liquidity that will move into gold, said Michael Langford, executive director at corporate advisory and consultancy firm AirGuide.

Investors also looked forward to the U.S. Federal Reserve two-day policy meeting next week for clues on the direction of monetary policy.

"A dovish FOMC, particularly in the scenario where they look to cap rates in the longer end of the U.S. yield curve, should relight the gold rally," OANDA's Halley said.

Silver XAG= slipped 1.7% to $24.15, while platinum XPT= dropped 0.3% to $1,019.50 and palladium XPD= was down 0.2% to $2,305.00.

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