Gold rebounds as traders weigh Omicron against hawkish Powell
There are ‘polarising views’ on gold’s future.
Gold rebounded from a three-week low as traders weighed the spread of the omicron coronavirus variant against comments by Federal Reserve Chair Jerome Powell on the need to curb inflation.
Researchers worldwide are racing to understand the full impact of the strain, first identified in South Africa and detected in countries from the U.K. to Brazil. It has prompted a raft of travel restrictions to curtail its spread, and sparked concerns about whether the strain could evade the protection of vaccines and fuel new surges in infections. Powell said Tuesday officials should weigh removing pandemic support at a faster pace to manage stubbornly high inflation.
There are “polarizing views” on gold’s future after Powell’s comments, according to StoneX analyst Rhona O’Connell, though she said investors should remember that inflation-adjusted yields are still in negative territory, which is positive for gold as it generates no interest.
A soft dollar also helped boost bullion’s appeal to foreign investors. The greenback fell to a nearly two-week low after U.S. ISM survey data for November showed new orders improving while price pressures remain elevated.
Bullion posted a marginal loss last month as investors weighed the prospects of the Fed dialing back on pandemic-era stimulus amid elevated consumer prices alongside uncertainty surrounding the omicron variant’s impact on the global recovery. The U.S. central bank is currently scheduled to complete its asset-purchase program in mid-2022 under a plan announced at the start of November to slow buying by $15 billion a month.
Spot gold advanced 0.6% to $1,784.48 an ounce by 11:28 a.m. in New York, after falling 0.6% on Tuesday. The Bloomberg Dollar Spot Index was 0.2% weaker, extending the previous day’s decline. Silver and palladium fell, while platinum gained.
© 2021 Bloomberg L.P.
Original Article: https://www.moneyweb.co.za/mineweb/gold-holds-decline-after-powells-hawkish-comments-on-tapering/