Gold prices fell nearly 2% on Friday following US President Donald Trump’s plan to restart the U.S. economy and provide early data on a COVID-19 treatment.
According to a report by CNBC, spot gold prices were down 1.8% after reaching a seven-year high earlier in the week. Investors have been pumping the price of gold over the last month following concerns of a looming economic recession caused by the coronavirus pandemic.
Saxo Bank analyst Ole Hansen to CNBC,
The latest sentiment drift to the positive side and narrative that a plan to return to normal is now afoot are seeing spot gold trading back through $1,700-an-ounce technical support.
The financial markets experienced a boost in confidence following Trump’s plan to gradually reopen the U.S. economy. The report included early data on trials from U.S. drugmaker Gilead Sciences Inc’s experimental drug being used to treat severe COVID-19 patients.
ActivTrades chief analyst Carlo Alberto De Casa published a note cautioning the market relief may be premature.
He wrote,
Investors are celebrating, perhaps a little too early, the apparent effectiveness of the Gilead drug in treating coronavirus and speeding up patients’ recovery from it.
He continued,
In this scenario, they are seeing less need to increase the percentage of gold in their portfolio and are moving back to some more risk-on assets.
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