Bears are coming! Gold prices fall from high levels after the impact of the new crown epidemic, and the Brexit agreement is approaching a comprehensive signal

  Gold Gold prices suffered a heavy blow and continued to fall, with spot gold recording its largest weekly decline in over two months. Rebounding from the early July high marked last Friday (November 27th), the bull market clung to the falling trend, unwilling to let go. Recent developments in the COVID-19 vaccine have been positive for risk sentiment, coupled with the UK and EU nearing a Brexit agreement, reaching broad consensus except for fishing rights. This leadership signal further catalyzed the downward trend.

Fundamental Analysis: The reality of confirmed COVID-19 cases is ignored; vaccine hopes resurface as a leading indicator

The global number of confirmed COVID-19 cases remains the biggest threat to the macroeconomy, but hopes for a COVID-19 vaccine are again emerging as a leading risk signal for gold prices, with global vaccine doses reaching 60 million. Not only the UK Medicines and Healthcare products Regulatory Agency (MHRA), but also drug regulatory agencies in the US and Europe are vying to approve the Pfizer BioNTech, Moderna, and AstraZeneca vaccine candidates, thus raising expectations of overcoming the COVID-19 pandemic. Dr. Fauci, director of the National Institute of Allergy and Infectious Diseases, expects a rise in COVID-19 cases in the US after the Thanksgiving holiday travel, while the COVID-19 vaccine will be rolled out in mid-to-late December. The US vaccination model will not be "centrally mandatory."

Pfizer and Moderna have announced encouraging vaccine trial results in recent weeks, with their COVID-19 vaccines showing approximately 95% effectiveness. The rollout of the COVID-19 vaccine will boost economic performance and reduce the demand for safe-haven gold. On November 26th, US President Trump stated that the COVID-19 vaccine could begin delivery as early as this week. Trump made this statement during a video conference with US troops stationed overseas. He also reiterated that frontline COVID-19 fighters, medical workers, and the elderly will be vaccinated first, but did not disclose which vaccine will be delivered to the US first. Goldman Sachs expects that by mid-next year, a large proportion of the population in major developed economies will have received the COVID-19 vaccine, which will drive Global Economy growth to "sharply rebound."

Lachlan Shaw, head of commodity research at National Australia Bank, said that the gold market has entered a new phase due to the impact of the COVID-19 vaccine news. Shaw said: "If US long-term real interest rates remain at current levels, it will be difficult for gold prices to break back above $1900 and $2000 per ounce."

Fundamental Analysis: UK Brexit Broad Agreement Reaches Consensus, Approaching Month-End Deadline Attracts Attention

The risk signal for gold prices is again led by Brexit developments. Amid growing market concerns about a UK-EU trade deal, UK Foreign Secretary Dominic Raab stated over the weekend: "Brexit negotiations with the EU are in a reasonable position, with progress on competition issues, but significant differences remain on fishing rights." He also mentioned that the negotiations were also causing concern as the last meeting took place, and said that the EU had moved the goalposts before the deadline. The UK government said that independent economic advisors have warned of Brexit in the absence of an agreement, including persistently low economic growth, inflation, and higher prices.

The BBC points out that as the Brexit deadline approaches, the final decision on "reaching or not reaching an agreement" depends on the overall judgment of the EU. They must clarify whether Prime Minister Johnson is bluffing about his willingness to accept higher economic costs, or whether he is indeed ignoring these decisions. Last week's UK Treasury review statement did not mention Brexit, but the Office for Budget Responsibility (OBR) report insisted on being inconsistent with the fiscal plan. It is worth noting that there are only 30 days left until the end of the EU transition period.

With the COVID-19 pandemic impacting across Europe, the UK's hardest-hit sectors include hotels and tourism, while Brexit has also caused disruptions in manufacturing supply chains, particularly in the automotive industry. The American Automobile Manufacturers and Dealers Association warned last week that failure to reach a final agreement on a Brexit deal would cost the automotive industry nearly $110 billion Pound , which would be shared equally by UK and EU car owners.

From the current situation, the EU has suffered less from a "no-deal" Brexit relative to its size. Given its weaker negotiating position, the UK must show a willingness to accept losses. Negotiations are expected to become more frequent in the coming weeks, and the UK and EU must allow time to pass necessary legislation, but this means they need a more flexible timetable, and may also mean their original Christmas plans will become more complicated.

Technical Analysis:

Due to significant changes in the fundamentals of gold prices, leading to dramatic technical adjustments, according to IG 's Client Sentiment Index, gold prices may rebound in the short term. However, unless gold prices rebound from the August 12th downtrend to $1825, the May high near $1765 will be watched by gold sellers.