The extended period of risk-on finally hit gold with the price breaking the support level of $1,850 to plunge to the lowest level since July. This negative correlation with risk is nothing new for gold as investors are continuing to invest in riskier assets instead, betting on a quick solution to Covid-19. The acknowledgement of Biden’s victory from the Republicans is likely to reduce the risk of further tensions and represents a supportive element for stocks, while haven assets such as gold are suffering. Therefore, we have seen a new decline of bullion, which is now in a danger zone as many stop losses and profit-taking measures were set to be triggered below $1,850.
As mentioned, despite the dominant risk-on scenario, central banks will still be forced to print a huge amount of money and this could revamp investors’ interest for gold in the near future.
