Gold rises modestly early Monday on omicron concerns. News of the new coronavirus variant’s spread affected all markets much more strongly when it broke on Friday, but the headlines continue to unsettle investors, boosting the yellow metal’s appeal as a hedge against uncertainty.
New travel restrictions and lockdowns were imposed around the world as nations took steps to prevent the variant, which appears to have originated in South Africa, from spreading. Gold prices also rose as investors sought bargains after a broad-market selloff Friday.
But speculation that the Federal Reserve will be forced to act in a few weeks to get a handle on inflation that is climbing at the fastest pace in three decades put a ceiling on gold’s rally. Reductions in central bank stimulus measures and the potential of higher interest rates are bearish for gold, because they make other investments more attractive. An increase in Treasury yields also put pressure on the yellow metal.
February gold futures dropped 3.6% last week to settle at $1,788.10 an ounce on Comex. The front-month contract rose $1.20 Friday after U.S. financial markets were closed Thursday for the Thanksgiving Day holiday. Gold is up 0.2% so far this month after advancing 1.5% in October. The yellow metal is down 5.7% so far in 2021. The February contract is up $3.80 (+0.45%) an ounce to $1,791.90 and the DG spot price is $1,790.40.
Japan is expected to announce an almost total ban on foreign arrivals in the country after warnings over the weekend from the World Health Organization about omicron. The U.S., the European Union and other major destinations blocked flights from several African nations. Cases have already been reported in Europe and Canada.
Investors are trying to determine whether the omicron fears are the latest blip in the coronavirus pandemic or if they pose a real threat to the economic recovery.
They will be closely listening to comments Monday from Fed Chairman Jerome Powell, New York Fed President John Williams and Bank of Japan Governor Haruhiko Kuroda. Powell and Treasury Secretary Janet Yellen are both scheduled to testify before Congress Tuesday and Wednesday. The San Francisco Fed’s Mary Daly and Richmond Fed’s Tom Barkin are scheduled to speak at a virtual event Thursday.
In economic data, key first-of-the-month manufacturing data from all major economies come out in the middle of the week, and the U.S. jobs report for November is due out Friday.
March silver futures decreased 6.9% last week to settle at $23.14 an ounce on Comex. The front-month contract lost 1.7% Friday. Silver is down 3.4% so far this month after ring 8.6% in October. The metal is down 12% so far this year. Silver prices are tied to industrial demand. The March contract has slipped $0.015 (-0.06%) to $23.120 and the DG spot price is $23.14.
Spot platinum decreased 7.4% last week to $961.60 an ounce and fell 2.3% Friday. The metal is down 6.6% so far this month after rising 6% in October. It’s down 10% so far this year. Platinum came under pressure last week after the World Platinum Council raised its forecast for a surplus of the metal this year and projected another big oversupply in 2022. Currently,the DG spot price is up $8.10 an ounce to $971.30.
Spot palladium fell 15% last week to $1,775.00 an ounce and tumbled 4.9% Friday. It’s down 11% so far this month after rallying 4.3% in October. It’s down 28% so far in 2021. The DG spot price is up $5.80 an ounce, currently, to $1,812.00.
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