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Gold gains as omicron, inflation worries burnish safe-haven appeal

Gold rose above the key $1,800 level on Friday and was set for its first weekly gain in five as worries over the omicron surge and hot inflation drove investors to safe-haven assets.

 

·         Spot gold was up 0.2% at $1,802.12 per ounce by 1:56 p.m. ET, taking its rise so far this week to 1.1%.

 

·         U.S. gold futures settled up 0.4% at $1,804.90.

 

·         SPDR Buy Back 0.87 tonnes at 978.57 tonnes

 

·         Equities fell across the board, reeling from a hawkish turn by global central banks looking to tame rising price pressures and the economic risk posed by rising COVID-19 cases.

 

·         “Growth is going to slow into next quarter, and U.S. equities are correcting off their highs, so it seems to be a panic out of equities into safe-haven assets such as gold and silver,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

 

The U.S. Federal Reserve meeting outcome had been a “big cloud of uncertainty” over precious metals and now the focus will be on the labor data, Streible said.

 

·         The Fed on Wednesday signaled three interest rate hikes by end-2022, a move that would have typically weighed on gold as higher interest rates increase the opportunity cost of holding non-yielding bullion.

 

But the metal marched higher because rate hike prospects had been priced in before the announcement, analysts said.

 

·         Gold’s gains came despite inflows into the dollar, also considered a safe store of value during geopolitical uncertainties.

 

But its outlook for 2022 “remains clouded with most of the bearish gold forecasts being driven by expectations for sharply higher real yields,” Saxo Bank analyst Ole Hansen said in a note.

 

·         Auto-catalyst metal palladium rose 3.1% to $1,782.99, extending sharp gains from Thursday.

 

·         A rebound in the auto sector is driving demand for palladium, Blue Line Futures’ Streible said.

 

·         Silver steadied at $22.47 while platinum rose 0.5% to $940.71.

 

 

·         Dollar climbs on risk-off moves as omicron, rate-hike talk spread

The dollar rose on Friday as traders retreated from riskier currencies amid talk of interest rate hikes by central bankers and concerns about the spread of Omicron cases.

The dollar index against major currencies was up nearly 0.6% in afternoon trading in New York, recouping all of the value it had lost on Thursday following a series of central bank policy statements.

The euro and British pound fell 0.6% and 0.5%, respectively, after having booked gains the two previous days. The euro stood at $1.1257 and the pound at $1.3253 at 1:47 p.m. ET.

The dollar index, at 96.5240, is up about 8% since May.

Among cryptocurrencies, bitcoin slipped 2% to $46,762.

 

·         Traders are comparing changing interest rates across currencies as central banks go at different speeds to adjust monetary policies in the face increasing signs of persistently high inflation and the Omicron threat.

 

·         The spread between yields on two-year government securities of the United States and Germany widened through the day to its biggest gap in a week and reflected the euro’s weakness.

 

·         Some analysts have cautioned against reading too much into changes in exchange rates at this stage.

 

·         Euro zone yields fall as markets digest ECB moves

Euro zone bond yields slipped back on Friday as markets assessed the reduction of monetary stimulus from the European Central Bank as being roughly in line with expectations.

 

·         COVID-19 UPDATES:

 

·         Omicron threat looms over winter holidays in Europe and U.S.

The Netherlands went into lockdown on Sunday and the possibility of more COVID-19 restrictions being imposed ahead of the Christmas and New Year holidays loomed over several European countries as the Omicron variant spreads rapidly.

Since the start of the month, U.S. COVID cases have risen 50%, according to a Reuters tally.

 

·         Biden to deliver Tuesday speech on omicron variant as Covid cases rise

President Joe Biden will deliver a speech on Tuesday addressing the omicron variant and unveil new steps the administration is taking to help communities in need of assistance, a White House official told NBC News on Saturday.

Biden is expected to go beyond his already unveiled “Winter Plan” with additional measures while “issuing a stark warning of what the winter will look like for Americans that choose to remain unvaccinated,” the official said.

 

·         Up to 10% of new French Covid-19 cases suspected to be omicron variant, minister says

 

·         Netherlands orders extreme lockdown until mid-January to rein in spread of omicron variant

 

 

·         Australia undaunted by mounting Covid-19 cases

Australian officials on Sunday said there was no need to clamp down on Christmas festivities even as new Covid-19 infections climbed in Sydney, with the country’s high vaccination rate helping keep people out of hospital.

 

·         China’s property distress sours steel sector in warning sign for economy

 

Reference: CNBC, Reuters, Worldometers