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Gold eased as investors tracked the deployment of the first Covid-19 vaccines in the U.S. and the continuation of talks over a stimulus bill

Gold
Gold

The first deliveries of the vaccine are scheduled for Monday morning and the initial lot will be in all 50 states by Wednesday, according to Gustave Perna, the army general overseeing Operation Warp Speed. Meanwhile, a bipartisan group of lawmakers will unveil a $908 billion relief bill on Monday, although there’s “no guarantee” that Congress will pass it, one of the negotiators said.

Bullion is heading for the first quarterly loss since 2018 as progress on vaccines and signs of recovery dent demand for the haven even as leading central banks continue to offer support for economies. This week, investors will keep a close watch on the Federal Reserve’s final meeting of the year, with markets widely expecting fresh guidance on its asset-purchase program.

“Even with a vaccine, at least another round of U.S. fiscal stimulus is needed, if not more -– raising inflation expectations,” said Howie Lee, an economist at Oversea-Chinese Banking Corp., who is long gold through 2021. “Additionally, we expect dollar outflows in 2021 while rates are highly expected to stay low till 2023.”

There may be some initial hesitation on being bullish on gold in the first quarter as vaccine developments accelerate, according to Lee. Still, gold could trade above $2,000 from the second quarter onward “as markets divert their attention toward excess liquidity in a world that is on its way to being inoculated,” he said.

Spot gold slipped 0.3% to $1,835.06 an ounce at 12:38 p.m. in Singapore, after a 0.2% gain on Friday. The precious metal remains 21% higher this year after hitting a record in August. Silver was little changed, while platinum rose 0.8% and palladium advanced 0.3%. The Bloomberg Dollar Spot Index fell 0.2%.

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