Yesterday we focused on the fact that for the first time since January 2020 the 50-day moving average in gold futures crossed beneath the 100-day moving average. This death cross suggests that there might be a pause in the current gold rally. It is more evidence pointing towards the precious metals price decline since hitting historic highs just one month ago.

For the first time since January 2020 the 50-day moving average (green line) crossed below the 100-day moving average (magenta line), illustrated on today’s chart labeled as “C”. This is commonly referred to as a death cross. Most frequently the term is about when the 50dma crosses below the 200dma.

It was absolutely a risk-on day favoring stocks and taking the Dow Jones Industrial Average to a new all-time high as the index trades just shy of 30,000. The Dow gained approximately 1.60 %, a total of 470.63 points in trading today and closed at 29,950.44. Equities staged a dynamic upside move today partially based on news from Moderna Inc.

Gold has closed higher for three of the last four trading days. That being said, gold did sustain a sizable price decline this week. On Monday gold futures traded to a low of $1,848, and closed just slightly above that at $1,854.30. As of 3:45 PM EST, the most active December Comex contract is currently fixed at $1,886.20, after factoring in today’s gain of $12.90 (+ 0.69%).

Gold futures today gained $14.20 and is currently fixed at $1875.80. This is in response to a risk-off environment as US equities sold off today, diminish yields in US bonds and concern about the pandemic.

Gold futures continued to drift lower, continuing the sharp decline that traders witnessed on Monday of this week. Although yesterday gold was able to recover slightly gaining $18 off of Monday sharp selloff, today traders took gold pricing back to erase those advances made on Tuesday.

Yesterday’s announcement that two companies have developed a vaccine that has now completed the stage III trials, and is 90% effective in killing the coronavirus. This was truly welcome news and responsible for the large gains in US equities and concurrently the steep selloff in both gold and silver.

Gold suffered this deepest single-day decline in the last seven years. Not since June 2013 has gold suffered a decline of this magnitude. The decline is a direct result of announcements made by two pharmaceutical companies, Pfizer and BioNTech which wrapped up stage III trials. The results showed that this vaccine had a 90% efficacy rate.

Today the New York Times reported that new cases of the coronavirus have reached a record high. The United States set a record with 121,000 new confirmed infections on Thursday. This followed Wednesday’s record number of 100,000 new cases. Breaking the one hundred thousand mark for the first time.

It was more than a trifecta of events that sparked today’s sharp gains in both gold and silver. First and foremost is the global pandemic that has resulted in economies worldwide contracting. This led to central banks revising their monetary policies to be more accommodative as they attempt to diminish the contraction so that economies can start to stabilize and eventually begin to rebuild.