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Summary
- ASX-listed gold stocks trading under pressure as the gold spot takes the worst hit since August 2020 over vaccine development news.
- During the evening session on 09 November 2020, Pfizer notified the market about a COVID-19 vaccine candidate and its 90 per cent efficacy against the COVID-19 virus in the latest trials.
- Pfizer’s announcement brought a sentimental shift in the market, leading to money flow from safe havens to risky assets.
On 10 November 2020, ASX-listed gold stocks reacted sharply, post the worst sell-off in the gold spot since August 2020. The gold spot plunged ~ 5.05 per cent from its intraday high of USD 1,965.61 to settle below the long-established psychological support of USD 1,900 per ounce.
Pfizer Vaccine Candidate Turns The Table
The decline in the gold market was primarily due to the announcement from Pfizer concerning the COVID-19 vaccine development. During the evening session on 9 November 2020, Pfizer notified the market about a COVID-19 vaccine candidate that the company developed with BioNTech SE.
As per the recent announcement from Pfizer, the vaccine candidate is 90 per cent effective against the COVID-19 virus in the latest trials; and now the Company plans to produce up to 50 million doses in 2020, which it would step up further to ~ 1.3 billion in 2021.
The announcement from Pfizer seems to have brought a sentimental shift in the market with many risky assets coming under the bull grip, reflecting a money flow from the safe havens to risky assets such as the crude oil.
U.S. T-Bill Yield Surges
Apart from a decline in the gold price, the market also witnessed a sudden splash in the U.S. 10-year T-bill with yield on the same climbing ~ 15.62 per cent from its intraday low of 800 bps to settle at 925 bps on 10 November 2020.
Is the Trend Changing for the Yellow Metal?
XAU Daily Chart (Source: Refinitiv Eikon Thomson Reuters)
Taking a look at the daily chart, it could be seen that the gold spot is once again retracing the downward sloping trendline, which turned into a support line post the previous breakout.
- The price fall halted near the -2 Standard Deviation of the 20-day simple Bollinger Band®, which is overlapping with the downward sloping support line; and thus, could be decisive.
- A further breakdown below the support line, if confirmed, could draw the bears attention.
ASX-listed Gold Stocks
A sudden decline in safe-haven asset and an increased money flow into risky assets seem to have improved the market’s risk appetite with the benchmark index S&P/ASX 200 showing an upside momentum, leading to a sell-off in ASX-listed gold stocks.
S&P/ASX 200 is on an upside momentum from the levels of 5,904.10 (intraday low on 2 November 2020) to the present high of 6,438.20 (as on 10 November 2020 12:03 PM AEDT), marking a price gain of ~ 9.04 per cent.
An improved risk appetite coupled with a money flow into risky assets is now changing short-term sentiments around the ASX-listed gold stocks with majority of them taking a downward road as reflected by a large decline in ASX All Ordinaries Gold Index.
Many ASX-listed gold stocks such as Northern Star Resources Limited (ASX:NST) and Saracen Mineral Holdings Limited (ASX:SAR) are under bear grip with stocks plunging 11% and 12% respectively on the ASX.
