Renewed Uncertainty Amid COVID Variant Pushes Gold Higher

December

7

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A risk-off sentiment could help feed into stronger gold prices amid renewed uncertainty about the newly identified COVID-19 variant dubbed “Omicron.”

Gold prices started to ease as a stronger dollar took over for much of 2021. Rising inflation should have helped gold’s cause, but the markets have been rallying off a strong greenback — but that could certainly change as more news flows in regarding the new variant.

“Uncertainty about the possible consequences of the new virus variant clearly reminds the markets that this pandemic is not over yet. The gold price should remain supported in this environment and the topic of tapering should take a back seat for the time being,” said Alexander Zumpfe, a precious metals dealer at Heraeus.

“This (omicron outbreak) worked as a catalyst for the yellow metal shine in recent days as rising global inflation and depreciating Indian rupee against the US dollar are already supporting gold prices to surge northward,” said Amit Sajeja, vice president of commodity research at Motilal Oswal.

Gold investors will want to watch how the variant evolves as the markets digest the news further. Any indication that global governments will once again have to take necessary action to stop its spread could boost gold.

“With the renewed optimism that the effects of the new Omicron covid variant will likely be mild, the risk sentiment is stabilizing in Asia this Monday, which is limiting the recovery momentum in gold price,” a Wall Street Journal article says. “Further, the US dollar rebound alongside the Treasury yields’ keeps gold bulls in check. However, if the virus concerns escalate, then gold price is likely to extend its rebound above the $1,800 mark.”

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Please Note: Goldtrends.net post this article as a means of providing the latest news relating to gold investment. The posting of this article does not necessarily relate to our views, and should not be seen as advice or guidance. Always consult a financial advisor before making any investment choices.


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