Commodities jolted on Pfizer vaccine news Commodities jolted on Pfizer vaccine news Commodities jolted on Pfizer vaccine news

Commodities jolted on Pfizer vaccine news

Commodities 5 minutes to read
Ole Hansen

Head of Commodity Strategy

Summary:  Precious metals and energy have reacted strongly in opposite directions after Pfizer and BioNTech earlier today said their coronavirus vaccine was more than 90% effective in preventing Covid-19. Gold slumped by more than 100 dollars while crude oil jumped by close to 10%. We believe both moves set up a mean reversion sooner rather than later.

Precious metals and energy have reacted strongly in opposite directions after Pfizer and BioNTech earlier today said their coronavirus vaccine was more than 90% effective in preventing Covid-19, hailing it a great day for science and humanity.

Coming at a time where Europe and the U.S. are facing a growing number of coronavirus cases, the dramatic shift in focus gave European stocks a major lift while the S&P 500 outperformed the technology heavy, and recently to a certain extent safe haven, Nasdaq composite index

Cyclical commodities depending on growth and demand jumped with crude oil trading higher by 10% while copper extended overnight gains to challenge the October high. Although the timing of a global rollout remains unclear, it is the first major light at the end of the tunnel for parts of the global economy that has been particularly hard hit by the pandemic. Some of these being the airline industry and others depending on our ability to move around. 

Brent crude oil which has traded within a downtrend for the past couple of months broke higher, thereby signaling a return to the range that has prevailed since June. Crude oil and commodities in general do not like equities have the luxury of being able to roll forward expectations as supply and demand need to balance every day. With oil in particularly this means that once it is out of the ground, it needs to be stored or consumed.

While today’s news eventually will set oil on the path to a more sustained, we think the market will struggle to break the September high at $46.50/oz before demand begins to recover. The news may also make it more difficult for OPEC+ to agree on a deal to postpone the planned January production hike. Hedge funds cut bullish oil bets ahead of the U.S. election and with rising Covid-19 cases they were unprepared for today’s news, hence the strong upside reaction through short covering and fresh momentum buying.

Source: Saxo Group

When asked by a journalist earlier today about the sharp fall in gold and silver I answered that the vaccine can kill Covid-19 but not remove the mountain of debt that has been accumulated during the past six months. By saying this we believe that the fundamental reasons for holding gold has not gone away by today’s announcement. With super loose monetary policy in place across the world – China being the exception - we could see an increased risk of a policy mistake being made. If and when that happens, we may see inflation start to make a comeback, thereby supporting demand for protection.

The sustainability of the gold rally after the U.S. election had already started to fade as dollar weakness was not backed up by lower real yields. The news therefore caught the market off guard and once $1930/oz, last week’s breakout level, was breached, long liquidation and fresh short selling helped drive the market sharply lower. In the short-term we will keep a close eye on 10-year U.S. breakevens (+6bp to 1,72%) and real yields (+5 to -0,79). As long real yields continues to rise, gold will struggle. The potential reflation risk emerging from today’s vaccine announcement probably holds the key to the eventual recovery in precious metals.

We do not believe that the gold market rally, let alone silver, has ended with today’s news. For now however the falling knife risk may keep potential buyers sidelined while waiting for the bounce. In terms of support, the first major level is the 38.2% retracement of the March to August rally at $1836/oz. Above that level the current correction can best be described as being a weak one within the existing bull market.

Source: Saxo Group

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.