Gold held onto its first weekly advance since mid-November as investors weighed concerns over the spread of the omicron virus variant against tightening monetary policy.
Lockdowns in the US will likely not be necessary even as cases rise, although many hospitals may be strained, especially in regions with lower vaccination levels, according to President Joe Biden’s top medical adviser, Anthony Fauci. Elsewhere, the Netherlands returned to lockdown, while UK Health Secretary Sajid Javid refused to rule out stronger measures before Christmas.
While bullion capped a weekly gain as omicron clouded the outlook for a global recovery, prices are still on track for the first annual loss in three years as central banks cut pandemic-era stimulus to fight inflation. Federal Reserve Governor Christopher Waller said a faster taper of the US central bank’s bond-buying program positions it to start raising interest rates as early as March.
Gold has finally seen some buying as worries over rising inflation and the increasing spread of the virus halt the equity rally, said Madhavi Mehta, a senior analyst at Kotak Securities Ltd. Still, prospects for Fed tightening have kept investors on the sidelines as evidenced by exchange-traded fund flows, and any major upside may be limited, Mehta said. Low trade participation near year-end may keep prices volatile, but anchored in the $1,780-1,800 range.
Spot gold rose 0.2% to $1,801.90 an ounce in Singapore, after climbing 0.9% last week. The Bloomberg Dollar Spot Index was flat after advancing 0.6%. Silver steadied, while platinum and palladium dropped.