Gold futures settled higher Tuesday, with the precious metal logging a partial recovery a day after suffering the sharpest daily drop in seven years.
The yellow metal’s recent decline was prompted by a Pfizer-BioNTech PFE, -1.32% BNTX, +7.59% report that their experimental coronavirus vaccine showed 90% efficacy in a Phase 3 study. However, bullion investors may be reasoning that the commodity fell too sharply and that some of the supportive elements that have helped buttress gold over the past several weeks and months persist.
Monday’s “vaccine news shows there is light at the end of the tunnel,” but the plunge in gold prices from that session “looks overdone,” said Adrian Ash, director of research at BullionVault.
Although the “surge in confidence following Monday’s vaccine headlines may continue…it hasn’t altered the longer-term outlook for weak growth, worsening government deficits and ultra-easy monetary policy,” he told MarketWatch. “That picture remains supportive for an investment in gold.”
December gold GCZ20, -0.21% GC00, -0.21% GOLD, -3.56% rose $22, or 1.2%, to settle at $1,876.40 an ounce, after tumbling 5% on Monday, to mark the biggest percentage drop for a most-active contract since June 2013, according to Dow Jones Market Data.
It seemed that investors “realized that central banks will still be forced to print money and the crisis is not over yet,” wrote Carlo Alberto De Casa, chief analyst ActivTrades in a note. “Despite yesterday’s drama, the price may yet still remain in the lateral phase of the last few weeks.”
Silver futures SIZ20, -0.83% SI00, -0.83%, meanwhile, added 76 cents, or 3.2%, to finish at $24.462 an ounce, following a 7.6% drop on Monday.
The “sharp washout in the face of the vaccine announcement [Monday] clearly suggests a large contingent of safe-haven bulls were indeed holding positions as a hedge against unending economic uncertainty,” analysts at Zaner Metals, wrote in a Tuesday note.
“We would now suggest that traders consider entering fresh longs in the coming sessions, as demand signals from China and India have continued to improve, and the $1,850 level in December gold has been respected on two key prior occasions,” they said.
The Zaner analysts also believe that given the “potential for an end to the deflationary blanket hanging over the market from global lockdowns,” there is “value” in the December gold contract just below the Sept. 28 low of $1,848.10. For December silver, they see “similar value” on a trade below $22.49.
In other Comex trading Tuesday, December copper HGZ20, -0.30% ended little changed, down 0.02% at $3.1555 a pound. January platinum PLF21, -1.14% tacked on 2.9% to $892.70 an ounce, but December palladium PAZ20, -0.37% lost 1.1% to $2,471.40 an ounce.