Spot gold tumbled 4.5% on Monday, the largest daily decline since August and wiped out all of its gains made last week. Pfizer and BioNTech announced that their vaccine candidate was found to be more than 90% effective in preventing COVID-19 in participants without evidence of prior infection in the first interim efficacy analysis from a phase 3 study.
This breakthrough could be disruptive to gold prices in the longer-term, as the rally of the precious metal started from March was largely, directly or indirectly, driven by the global pandemic.
From a technical point of view, spot gold's downside risks re-emerged as shown on the daily chart. A bearish evening star pattern may have formed in the past few session, where a breakthrough from the declining line may be proven to be a false break. The level at $1,921 might be considered as the nearest resistance, while the 1st and 2nd support are expected to be located at $1,848 and $1,775 respectively.
Source: GAIN Capital, TradingView