Gold and Oil move on Pfizer’s COVID-19 Vaccine Annoucment
- Gold and Oil react to American Pharmaceutical company Pfizer’s announcement of a potential COVID-19 Vaccine.
- As a result, Gold producers, Saracen Minerals (ASX: SAR) and Newcrest Mining (ASX: NCM) fell 9.7 per cent and 15 per cent respectively.
- Oil producers Beach Energy (ASX: BPT) and Oil Search (ASX: OSH) rose 25 and 24 per cent respectively.
Gold and Oil saw particularly violent moves in the opposite direction on Tuesday the 10th of November in reaction to a Pfizer COVID-19 Vaccine announcement. The American Listed company announced that the vaccine proved a 90 per cent effectiveness in stopping the infectious disease. The scientist behind the Vaccine confidently stated his belief that the drug could “bash the virus over the head.”
In reaction to the Vaccines announcement, the price of Gold fell 4.56 per cent, as the commodity lost its safe-haven status. The Vaccine though not fully approved nor distributed, provided the market's confidence that society was on a genuine path to recovery. As a result, markets across the world, including Australia saw a shift from ‘COVID-19 stocks’ to ‘recovery stocks.’ Investors no longer needed the safety that gold provides from economic and political turmoil, a shift that was reflected in major Australian Gold companies.
Currently, the price of Gold is sitting at $1921.90 as of the 13th of November 2020, 9.7 per cent down from its all-time highs. Similarly, Saracen Minerals opened 15 per cent lower after the news and Newcrest mining opened five per cent lower. The US 10-year Treasury years rose on the Pfizer news both paving a path for lower gold prices until the commodity found levels of support at which it still hovers
In starch contrast, oil saw similar movements in the opposite direction as the possibility of a reopening world economy breached the Horizon. In the days after the announcement, West Texas Intermediate jumped over 10 per cent.
Months of a lack of demand, oversupply and a lack of macroeconomic events have allowed Oil prices to hover around a suppressed $40 per barrel. This is 36 per cent lower than the beginning of 2020 and half of what the commodity traded in 2014.
On the back of the news, Australia companies reacted accordingly. Oil Search jumped over 15 per cent in the following days and Beach Energy rose over 24 per cent. In tandem to the rising Oil prices, it was also announced that OPEC plus would potentially implement further production cuts which would support rising Oil prices
However, in recent days it has been announced there was a 4.3-million-barrel increase in crude inventories as opposed to a 900,000 fall. This has caused prices to slump slightly across the commodity and relevant companies.
Moving forward, both Oil and Gold remain standing on uncertain ground. A COVID-19 Vaccine coming closer to fruition however its success and distribution remains to come.
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