Gold prices were on track to fall for a second consecutive week as investors chanced their arms on equities again on news of not one but two effective coronavirus vaccines.
The safe haven asset has seen prices jump almost 25 per cent this year, with traders piling in as stock markets melted down around the world.
However, that surge has slowed in recent weeks, with the spot gold price falling to $1867.31 today.
On Monday, pharma giant Moderna said that its coronavirus vaccine had proved 95 per cent effective against the disease, a week after Pfizer announced the same for its vaccine.
Both announcements prompted markets to rally on the hope that an end could be in sight for the upheaval caused by the pandemic.
Stephen Innes, Chief Global Market Strategist at Axi, said that optimism over a vaccine would see investors scrap speculative bets on the commodity.
“News of another vaccine is most welcome but is intuitively negative for bullion prices, and with several in the pipeline, it screams sell gold”, he said.
In addition, calls from US treasury secretary Steve Mnuchin for the Federal Reserve to end its pandemic lending programmes also weighed on gold prices.
In a letter to Fed chair Jay Powell, Mnuchin said that $455bn allocated to the Treasury should be returned to Congress to spend as it sees fit.
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“If the Fed does start shrinking its assistance programme that could be a bit of headwind for gold again. The monetary debasement argument that has supported gold could weaken,” said Lachlan Shaw, National Australia Bank’s head of commodity research.