The ‘covenant of Allah’ refers to the covenant of the Torah. They denied all what they believed in (from the Torah) about the description of Prophet Muhammad (saws) and that they must follow him when he appears and exchanged it for a small price. What was that small price?

Reason of revelation:

It’s said that a group of people visited Kaab Bin Al-Ashraf, who was a Jew, asking for food in a year of drought and famine. Then, he said: ‘do you know that this man is a messenger of Allah?’ ‘Yes,’ they said, and he replied: ‘I was about to feed and provide clothing for you, but Allah has deprived you from a very good thing.’ So, they wondered about the reason which was, according to Kaab, that they said they believe in Prophet Muhammad. Therefore, they asked him to give them sometimes to review their stand. At the end, they preferred food and clothing over belief. After that, they told Kaab Bin Al-Ashraf that they were mistaken and had read their books in a wrong way; so, Prophet Muhammad was never a messenger. He provided them with the food and clothing. Thus, they were the people who exchanged their signs for a small price, that is food and clothing.

(… أُولَٰئِكَ لَا خَلَاقَ لَهُمْ فِي الْآخِرَةِ …) (…will have no share in the Hereafter…): They have no fortune in the afterlife.

(… وَلَا يُكَلِّمُهُمُ اللَّهُ …) (…and Allah will not speak to them …): Allah (swt) never speaks to them in good but in punishment.

(… وَلَا يَنظُرُ إِلَيْهِمْ يَوْمَ الْقِيَامَةِ …) (…or look at them …): It’s a mercy when the Almighty looks at someone, but this is not the case here.

( وَلَا يُزَكِّيهِمْ وَلَهُمْ عَذَابٌ أَلِيمٌ … ) (…nor will He purify them; and they will have a painful punishment): They will never be purified.