After months of continued gains, the rally in gold prices came to a halt earlier in the week as sentiment toward the global economic recovery improved after the release of positive U.S. economic data and the steady progress in the development of an effective coronavirus vaccine.

On Tuesday, the leading benchmark futures contract for gold prices, the COMEX Gold futures, declined by 5.78 percent to $1,921.8 per ounce. Spot gold prices also dropped from $2,029.08 per ounce on Monday to $1,926.06 per ounce on Tuesday. The drop was the largest single-day drop in spot gold in over seven years.

Gold prices reached a peak of $2,070.05 per ounce at the end of last week after months of continued gains since April. Spot gold recovered slightly on Friday, hovering around $1,948.96 per ounce in afternoon trading.  

The halting of the rally in gold prices came after Russian President Vladimir Putin announced that the country had developed a COVID-19 vaccine that was approved for public use. The announcement lessened investor appetite for safe-haven assets, with some entirely closing their gold positions.

On Wednesday, the Shanghai Gold Exchange put up a notice to inform investors of the price fluctuations. The exchange noted that multiple market uncertainties could cause further fluctuations and investors should be wary of their positions.

Analysts at Nanhua Futures added that the decline in new coronavirus cases in the US had also lowered investor demand for hedging their risks. Positive economic indicators have also increased positive outlook for an accelerated economic recovery.

The head of metals research at Bank of America Merrill Lynch, Michael Widmer, speculates that the gold price rally has merely hit a temporary pause. He added that the bank is still standing with its forecast that the commodity would hit a price of more than $3,000 per ounce within the next 18 months. Widmer pointed out that the ongoing financial depression, the weakening U.S. dollar, and the continued global stimulus rollouts support the bank's bullish forecast.

The World Gold Council also believes that gold prices will remain bullish throughout the year. On Tuesday, the council stated that the commodity is still in the early stages of its price cycle and it will remain bullish for the long-term.