Gold climbs as focus returns to loose monetary policy

Gold rose 1% on Tuesday, following a sharp slide in the last session, as focus returned to the likelihood of more monetary stimulus to revive a global economy still reeling from the Covid-19 pandemic.

Spot gold climbed 1.1% to $1,881.39 per ounce by 0605 GMT, while U.S. gold futures were up 1.3% at $1,878.70.

Prices slumped as much as 5.2% on Monday after U.S. drugmaker Pfizer Inc said its experimental Covid-19 vaccine was more than 90% effective based on initial trial results.

Central banks are unlikely to change their accommodative stance in the near to medium term as it will take time for a vaccine deployment and a pick-up in growth, inflation and labor market, said Lachlan Shaw, head of commodity research at National Australia Bank.

“If inflation expectations pick up as a result of increased economic activity from the vaccine, that should keep a lid on long U.S. real yields and be a supporting driver for gold.”

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CNN Business/Clare Duffy
Tech glitches at Schwab, Fidelity and other online brokers mean some missed out on Monday’s monster rally

The US stock market rallied early Monday, but not everyone was able to get in on the fun. Several electronic brokers experienced technical issues that kept some customers from using their services as normal.

Fidelity, TD Ameritrade, Schwab and Vanguard reported tech problems on Monday, though all said the issues were resolved within several hours. Some attributed the problems to heavy activity early in the day.

US stock futures surged Monday morning before the opening bell after drugmaker Pfizer (PFE) said early data on its coronavirus vaccine shows it’s more than 90% effective, and stocks shot up at the open. Individual stocks such as theater chain AMC (AMC) also spiked on the vaccine news. Investors may also have been reacting to the Saturday announcement that Joe Biden was the projected winner of the US presidential election.

“What we’re seeing today is primarily issues on authenticating in,” said Todd Kenney, chief technology officer of Sterling Trading Tech. “People see news coming in about a potential Covid vaccine, futures were way up this morning … What’s the first thing they want to do? They want to see how their accounts are reacting, maybe initiate some trades, maybe buy some Pfizer or sell some Peloton.”

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Forbes/Sarah Hansen
Pfizer’s ‘90% Effective’ Vaccine News Doesn’t Mean Stimulus Is Dead

Pharma giant Pfizer announced Monday that its vaccine candidate could be 90% effective in preventing transmission of the coronavirus, sending stocks soaring, but remember: that good news doesn’t mean the U.S. is out of the woods when it comes to the economy or the virus, and experts agree that another federal stimulus package is still needed.

While Pfizer’s Monday announcement was encouraging news—especially to investors who were sobered last week as the prospects of a “blue wave” and massive federal stimulus package faded—it will still be months before the vaccine is widely available.

Meanwhile, the U.S. is facing an alarming spike in Covid-19 cases and a dire economic situation that isn’t likely to improve on its own.

More than 11 million people are unemployed, 8 million have fallen into poverty since May, sectors like restaurants, retail, and airlines are still struggling, and key provisions of the CARES Act have expired.

Neil Bradley, executive vice president of the conservative-leaning Chamber of Commerce, called on lawmakers Monday to pass another stimulus bill before the end of the year, the New York Times reported, saying that he does not expect the U.S. to recover the jobs it has lost during the pandemic until 2022.

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