PRECIOUS-Gold set to extend weekly fall on stimulus doubts, vaccine hopes

  • Reuters
  • Commodities News
PRECIOUS-Gold set to extend weekly fall on stimulus doubts, vaccine hopes
Credit: © Reuters.

* Gold's move above $2,000 in 2021 still likely- Citi

* Outflows of about 40 tonnes so far in November from SPDR ETF

* Interactive graphic tracking global spread of coronavirus: (Adds comments, updates prices)

By Eileen Soreng

Nov 20 (Reuters) - Gold was set for a second weekly fall on Friday as promising COVID-19 vaccine trials and U.S. Treasury Secretary Steven Mnuchin's call to end the Federal Reserve's key pandemic lending programmes eroded bullion's safe-haven appeal.

Spot gold XAU= fell 0.1% to $1,866.19 per ounce by 0832 GMT and was down 1.1% for the week.

U.S. gold futures GCv1 were up 0.2% at $1,865.40.

In a letter, Mnuchin told Fed Chairman Jerome Powell that $455 billion allocated to the Treasury under the CARES Act should be instead available for Congress to reallocate, sparking uncertainty about stimulus programmes. the Fed does start shrinking its assistance programme that could be a bit of headwind for gold again... The monetary debasement argument that has supported gold could weaken," said Lachlan Shaw, National Australia Bank's head of commodity research.

Meanwhile, data from AstraZeneca AZN.L and Oxford University showed their potential COVID-19 vaccine produced a strong immune response in older adults. COVID-19 vaccine developments should slow but not end the secular gold bull cycle without a hawkish pivot in U.S. monetary policy," Citi Research said in a note, adding gold's move above $2,000 in 2021 is still likely. [nFWN2I51F7

Indicative of sentiment, holdings in the SPDR Gold Trust GLD exchange-traded fund saw net outflows of about 40 tonnes so far in November. GOL/ETF

Investors pulled $4 billion from gold, the biggest outflows ever, amid a rush for riskier assets last week, BofA said on Friday. considered a hedge against inflation and currency debasement, has gained 23% this year, benefiting mainly from unprecedented stimulus unveiled to cushion the pandemic's impact.

"Gold's long-term story still remains uncompromised because the monetary policy is not going to change anytime soon," said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai, India.

Silver XAG= rose 0.3% to $24.17 per ounce. Platinum XPT= gained 0.6% to $957.00, while palladium XPD= was up 0.3% at $2,332.50.

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