Safe-haven gold rises as virus surge sours risk mood

Jan 4 (Reuters) – Gold prices rose on Tuesday, with investors flocking to the safe-haven metal as surging COVID-19 cases of the Omicron variant threaten the global economic recovery.

Spot gold was last up 0.7% at $1,813.16 per ounce by 11:06 EDT (1606 GMT), having marked its worst session in more than a month on Monday. U.S. gold futures were up 0.9% to $1,815.40.

Ed Moya, senior market analyst at brokerage OANDA, said the year started off with fresh record highs for equities but it is hard to argue this winning streak will continue, so investors have started to go back into safety.

“The impact of Omicron is going to be mostly felt on the inflationary side and on economic recovery,” Moya added.

Several countries have imposed fresh restrictions to tackle a surge in cases driven by the new variant.

Concerns surrounding the Omicron variant have sparked a safe-haven bid in gold, TD Securities wrote in a note, but added that “higher gold prices are inconsistent with global markets pricing in a 70% probability for a Fed rate hike in March, which places a cap on prices.”

Gold, which offers no yield of its own, tends to fall out of favour with investors when interest rates rise.

Renewed inflation concerns could hit the marketplace in the near term and sap risk appetite as bond yields are likely to continue to rise, Jim Wyckoff, a senior analyst at Kitco Metals, said in a note.

A rise in U.S. treasury yields on expectations for a Fed rate hike this year lifted the dollar to five-year high versus the yen.

Silver rose 0.6% to $22.99 per ounce, platinum was up 1.8% to $972.01, and palladium climbed 2.5% to $1,871.36.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.


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