Economic news

Gold Regains some Ground as Omicron Fears Buoy Safe Havens

  • Gold remains trapped in a $1,770-$1,825 range - analyst
  • U.S. tightens travel rules; more countries secure borders over Omicron

Dec 1 (Reuters) - Gold rose on Wednesday as lingering concerns surrounding the Omicron coronavirus variant helped bullion recoup some losses from the last session that were driven by the U.S. Federal Reserve chief's seemingly hawkish stance.

Spot gold rose 0.6% to $1,784.00 per ounce by 1017 GMT, after falling as much as 0.9% in Tuesday's session on Jerome Powell's remarks that the central bank will discuss whether to end bond purchases earlier than previously anticipated in its December meeting.

U.S. gold futures rose 0.4% to $1,783.90.

Reduced stimulus and interest rate hikes tend to push government bond yields up, raising non-interest bearing gold's opportunity cost.

Investors appear to be taking the words of the Chair with a pinch of salt, after he hinted at the need to accelerate the pace of tapering and dismissed the term 'transitory' as no longer appropriate to describe inflation, Ricardo Evangelista, senior analyst at ActivTrades, said in a note.

"Normally, such words would have given the dollar a big boost. However, investors remain concerned over the potential impact of the Omicron variant on the economy, a scenario that is supportive for the safe haven gold."

Meanwhile, the United States imposed tougher COVID-19 testing rules for air travellers, and more countries tightened their borders amid uncertainty over the new variant. 

"The market is largely a jobbing exercise at the moment, with polarised views between the bulls and the bears," StoneX analyst Rhona O'Connell said, adding that Tuesday's fall provided another buying opportunity and for the time being, gold remains trapped in a $1,770-$1,825 range.

Spot silver rose 0.4% to $22.88 per ounce. Platinum gained 2.2% to $954.40 and palladium rose 1.8% to $1,768.70.

Reporting by Arundhati Sarkar in Bengaluru; Editing by Shailesh Kuber

Source: Reuters

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