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Gold flat as cautious investors gauge omicron Covid variant impact

 

Spot gold was unchanged at $1,785.13 per ounce by 0055 GMT. U.S. gold futures rose 0.2% to $1,784.30.

 

The World Health Organization (WHO) said on Monday the Omicron coronavirus variant carried a very high risk of infection surges, while border closures by more countries cast a shadow over an economic recovery from the two-year pandemic.

 

But a South African infectious disease expert said existing vaccines should be effective at preventing severe disease from the variant.

 

U.S. Federal Reserve Chair Jerome Powell said on Monday he continues to expect inflation to recede over the next year as supply and demand come into better balance, but warned that the new strain of Covid-19 muddies the outlook, and prices could continue to rise for longer than earlier thought.

 

Reduced stimulus and interest rate hikes tend to push government bond yields up, raising the opportunity cost of gold, which pays no interest.

 

European Central Bank policymakers sought to reassure investors over the new coronavirus variant on Monday, arguing that the euro zone’s economy had learned to cope with successive waves of the pandemic.

Costs are rising at the fastest rate in over 20 years for firms in Britain’s services sector, according to a business survey which shows why the Bank of England may soon raise interest rates.

 

Platinum rose 0.4% to $966.58 an ounce, while palladium gained 0.4% to $1,801.27.

 

Russia’s Nornickel raised its 2021-2030 investment estimate to $35 billion, allowing the world’s largest producer of palladium to upgrade its production infrastructure and raise its long-term outlook for PGM output.

 

Spot silver was steady at $22.88 an ounce.

·         Currencies stabilize as worst omicron fears recede

The dollar index, last traded at 96.203, up from a low of 95.973 from Friday.

The euro was about flat at $1.12955, off Monday’s high at $1.1335.

 

·         Rolling back U.S.-China tariffs would ease inflation in the U.S., former Treasury secretary says

·         China’s factory activity unexpectedly grows in November as supply pressures ease

China’s factory activity unexpectedly picked up in November, growing for the first time in three months as raw material prices fell and power rationing abated, taking some pressure off a manufacturing sector grappling with soft demand.

 

The official manufacturing Purchasing Manager’s Index (PMI) was at 50.1 in November, up from 49.2 in October, data from the National Bureau of Statistics (NBS) showed on Tuesday.

·         China is an ‘extended voice’ for Iranian hard-liners in nuclear talks, says think tank

Behnam Taleblu of the The Foundation for Defense of Democracies says the success or failure of the United States’ strategy toward Iran depends on the outcome of its strategy vis-a-vis China.

·         Omicron poses risks to global growth, inflation: Rating agencies

The Omicron COVID-19 variant could hurt global growth prospects while also pushing prices higher, rating agencies Moody’s Investors Service and Fitch Ratings said on Monday, after the World Health Organization said the variant carried a very high risk of infection surges.

 

·         Australia delays border reopening as Omicron cases rise

Australia has delayed its border opening following a rise in Omicron cases.

On Monday, Prime Minister Scott Morrison told Australians to “remain calm” as the country reviewed its plans to reopen the borders to skilled migrants and students from December 1.

 

However, not long after Mr Morrison delayed the reopening by two weeks, with the new date December 15.

·         Moderna CEO warns COVID-19 shots less effective against Omicron , markets tumble

Drugmaker Moderna (MRNA.O) set off fresh alarm bells in financial markets on Tuesday as the firm's chief warned that COVID-19 vaccines are unlikely to be as effective against the Omicron variant as they have been against the Delta version.

 

·         Oil slumps after report renews Covid uncertainty

Both benchmarks tumbled more than $1 on the news. Brent crude futures fell $1.82, or 2.5%, to $71.62 a barrel at 0605 GMT. U.S. West Texas Intermediate (WTI) crude futures dropped $1.61, or 2.3%, to $68.34 a barrel.

 

Oil plunged around 12% on Friday along with other markets on fears the heavily mutated Omicron would spark fresh lockdowns and dent global growth, hurting oil demand.

 

·         Dow futures reverse sharply, drop about 400 points on omicron Covid uncertainty

Stock futures tumbled in early Tuesday trading, reversing from a rebound on Wall Street as investors reassessed risks associated with the new omicron Covid variant.

 

Futures on the Dow Jones Industrial Average dived 424 points, or 1.21%. S&P 500 futures was down 1.12%, and Nasdaq 100 futures fell 0.57%.

 

The reversal came after Moderna CEO Stephane Bancel told the Financial Times that he expects existing vaccines to be less effective against the new variant. Bancel told CNBC on Monday that it could take months to develop and ship an omicron specific vaccine.