Gold remains stable as Omicron worsens risk sentiment

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  • Omicron uncertainty could lead to more accommodating cenbank – analyst
  • European stocks slide on wave of viruses

December 20 (Reuters) – Gold prices were flat on Monday, hovering near a three-week-wide peak in the previous session, as the spread of the Omicron coronavirus variant choked appetite for riskier assets, raising the attractiveness of bullion as a safe haven.

Spot gold was flat at $ 1,797.07 an ounce at 11:40 a.m. GMT, while US gold futures fell 0.4% to $ 1,798.00. In the previous session, prices hit their highest levels since November 26th.

European stocks retreated amid a global sell-off of stocks, with investors worried about the specter of tighter COVID-19 restrictions hitting the global economy as cases of the Omicron variant increase.

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But gold’s movements are expected to remain subdued, in part due to dwindling liquidity through the end of the year, analysts said.

Negative risk appetite over Omicron concerns and low US Treasury yields – which reduce the opportunity cost of holding bullion – are supporting gold prices, said Michael Hewson, market analyst Head of CMC Markets UK.

But the uncertainty over Omicron could lead to a more conciliatory rhetoric from the central bank in 2022, while problems in Washington over the domestic investment bill and risks around Ukraine also heighten the appeal of the government. metal, said Stephen Innes, Managing Partner of SPI Asset Management. Read more

Gold is seen as a hedge against higher inflation and geopolitical uncertainties, but a rate hike by the U.S. Federal Reserve would increase the opportunity cost of holding gold, which earns no interest.

European Central Bank policymakers gathered last week called for greater recognition of inflation risks, but were pushed back by chief bank economist Philip Lane in an unusually robust debate. Read more

Spot silver was flat at $ 22.32 an ounce. Platinum fell 0.76% to $ 922.93 an ounce and palladium 2.87% to $ 1,730.53 an ounce.

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Reporting by Bharat Govind Gautam and Seher Dareen in Bengaluru; Additional reports by Kavya Guduru; Editing by Pravin Char and Sherry Jacob-Phillips

Our Standards: Thomson Reuters Trust Principles.


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