Gold edges higher as policy outlook weighed against Omicron
Information about Gold edges higher as policy outlook weighed against Omicron
Gold edged higher after its best week in two months as traders weigh the outlook for monetary policy against the threat posed by a fresh coronavirus wave in the US.
Facing pressure from Congress and the public to tackle the hottest inflation since the 1980s, a chorus of Federal Reserve officials this month floated raising rates in March and the potential need to hike as many as five times this year, marking a clear shift in projections from just a few weeks ago. The central bank meets next Tuesday to decide on policy.
While more central banks globally are seeking to normalise monetary policy to contain price pressures, China on Monday lowered a key interest rate for the first time since the peak of the pandemic in 2020. That came as a property-market slump and repeated virus outbreaks damped the nation’s growth outlook.
Gold is holding above $1 800 an ounce after dropping for the first time in three years in 2021 as investors started to price in tighter monetary policy. Still, demand for the haven asset has been supported amid concerns over the impact of omicron, with US Surgeon General Vivek Murthy saying the outbreak is likely to worsen and that “a tough few weeks” lie ahead.
“Expectations increasingly priced for a tighter policy outlook, rising Treasury yields and a recovery in the US dollar from its recent sell-off” are headwinds for gold, said Yeap Jun Rong, a strategist at IG Asia Pte. Still, the precious metal is underpinned by some risk-off sentiment in markets, although there is resistance at the $1 830 level, he said.
Trading is likely to be quiet on Monday during the US public holiday, with the bond market closed.
Spot gold rose 0.2% to $1 820.91 an ounce at 11 a.m. in London, after gaining 1.2% last week, the most since November. The Bloomberg Dollar Spot Index was steady after gaining 0.2% in the previous session. Silver and palladium advanced, while platinum edged lower.
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