On Wednesday we reported that gold investors were rubbing their hands together in glee as the news of Pfizer’s 90% successful vaccine saw gold price drop by £74.21 ($100) on Monday as markets breathed an enormous sigh of relief. As we reported, this knee jerk reaction will be fleeting as in the longer term, all of the critical factors which support gold through a very bullish 2021 remain firmly in play.
Head of commodity strategy at Saxo Bank, Ole Hansen said that gold is likely to remain bullish for the long term despite this once-in-a-lifetime dip, explaining, “A lot of damage has been done that can’t easily be fixed or that will take a lot of time. There is still plenty of uncertainty to support gold’s new regime. A vaccine is positive news, but it doesn’t change the narrative. The reality is that interest rates won’t be hiked anytime soon, and that will continue to be good for gold.”
As testament to that, we’re already starting to see the precious metal rebound, with prices edging £1,430.15 ($1,876.92) in early trading this morning (Friday) – with many countries still battling a large resurgence of infections. US caseloads have increased 72% in the last 14 days according to data from the New York Times, with a record 160,000 new cases yesterday (Thursday). It’s a similar picture elsewhere, with the UK also recording its highest daily figure of the pandemic yet the same day.
While everyone is welcoming of the light at the end of the tunnel the vaccine breakthrough promises, the economic implications will continue to be felt for some time to come according to stark warnings issued earlier this week by the Federal Reserve and the European Central Bank.
The bottom line? We’re already starting to see gold gain back momentum and it’s only a matter of time before this incredible window to buy slams firmly shut. Act fast and buy now.
Markets overreacted to vaccine news says economics professor
Global markets hugely overreacted to the Pfizer vaccine announcement on Monday, a professor of applied economics at renowned John Hopkins University, which has been tracking the global spread of COVID-19 has warned, citing the suspicious timing of the pharmaceutical firm’s CEO mass share sale.
Steve Hanke said, “I believe uncertainty reigns in the whole sphere of vaccines. They announced on Monday, and on Tuesday, the CEO Albert Bourla, had sold 62% of his stock, so the insiders believed there was an overreaction and that there’s a lot of uncertainty out there.”
This of course is good news for gold as it means the price dip we saw this week is almost certain to be nothing more than a blip, with strong gains on the horizon when the dust settles. Buy now to take advantage of this unusual opportunity.