Gold futures were trading higher on Friday and seeing their loftiest levels in about three weeks as investors focused on worries about rising speculation on Wall Street and the efficacy of COVID vaccines.
Concerns that the economic recovery may take longer than hoped, even with vaccines to fight the pandemic, are disrupting the bullish trend for stocks and buoying precious metals, dealers say.
“Chief among investor concerns is the realization that the economic recovery will take longer than expected as delays in the roll out of the vaccines and the new variants of the virus means lockdowns will last longer than expected,” wrote Fawad Razaqzada, market analyst at ThinkMarkets, in a daily research note.
“There are also some concerns on over-stretched valuations for US stocks, with shares of big technology companies struggling to shine despite mostly stronger-than-expected results,” the analyst wrote.
Investors were disappointed by the efficacy of the Johnson & Johnson vaccine and the stock fell, even though the results from the one-shot remedy is better than the effectiveness for some winter flu vaccines and could pave the way for its deployment across the U.S. within weeks.
Investors also harbored concerns about the integrity of the stock market as shares of GameStop soared over 60% premarket, after closing down 44% Thursday. Similarly, shares of AMC Entertainment Holdings were up more than 40% ahead of the opening bell Friday, as popular trading platform Robinhood Markets said late Thursday that it would reinstate some trading in stocks that it had curbed earlier.
Market participants are growing increasingly concerned that an army of individual investors gathering on chat forums like Reddit and battle professional short sellers, could create ripples throughout the financial system.
Against that backdrop, gold prices have been elevated, popping above its 50-day moving average at $1,858.82 an ounce, according to FactSet data.
April gold was trading $34.20, or 1.8%, to $1,874.60, after settling 0.4% lower on Thursday and marking gold’s sixth straight day of declines, the longest skid for prices since the seven-session loss ended March 5, 2019, FactSet data show.
If today’s gains hold it would represent around the highest levels for gold since Jan. 7.
Silver for March delivery added $1.67, or 6.5%, to $27.57 an ounce, after gaining 2.1% in the prior session and carving out its highest settlement since Jan. 7.