Gold steady as rising virus cases offset vaccine optimism

Gold held steady in a narrow range on Friday, with optimism over a COVID-19 vaccine countered by market concerns about its rollout as global infections continue to mount.

Spot gold were little changed at $1,877.30 per ounce but was down 3.7% for the week, heading for its worst weekly loss since September after the initial vaccine euphoria dented safe-haven investor demand. U.S. gold futures were up 0.2% at $1,877.60.

“Gold has rebounded because the pandemic and the COVID-19 numbers globally are still rising. The market optimism towards the vaccine and risk-on sentiment has faded,” said Bank of China International analyst Xiao Fu.

“There’s only going to be a limited number of vaccines produced in the next three months, even in 2021, but there could be other companies coming up with vaccines as well. There could be other factors like mutation of the virus, the need to develop a new vaccine.”

Gold slumped 4.6% on Monday, its biggest daily fall since Aug. 11, after drugmaker Pfizer and BioNTech SE said their COVID-19 vaccine was more than 90% effective based on initial trial results.

U.S. Federal Reserve chairman Jay Powell and ECB President Christine Lagarde said the economy was still in for a tough time even if development of a potential vaccine was reason for some optimism further ahead.

European officials warned against COVID-19 complacency and said that measures to control a surge in infections must continue.

The dollar index held steady but was on track for a 0.7% weekly gain.

In other precious metals, silver was flat at $24.22 an ounce, platinum rose 0.5% to $884.28 and palladium was up 0.5% at $2,343.11.