Gold bounces as dollar eases, Omicron-led volatility lingers

NEW YORK: Gold gained 1% on Wednesday, tracking a retreat in the dollar as investors used a pullback in the previous session to buy bullion as a hedge against wider market volatility amid concerns over the impact of the Omicron coronavirus variant.

Spot gold rose 0.9% to $1,789.01 per ounce by 10:36 a.m. ET (1536 GMT), after falling as much as 0.9% on Tuesday after Federal Reserve Chair Jerome Powell’s remarks the central bank will discuss whether to end bond purchases earlier than expected in its December meeting.

U.S. gold futures advanced 0.8% to $1,789.90.

Concerns over the virus variant are supporting gold as fresh restrictions will slow the global economy, with a weaker dollar also boosting demand for the safe-haven metal, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

But gold’s bounce came alongside a sharp rebound in equities, even as the U.S. imposed tougher COVID-19 testing rules for air travellers, while more countries tightened borders.

“There remains a bit of safe-haven demand for the precious metals as there is still some uncertainty and anxiety in the marketplace,” said Jim Wyckoff, senior analyst at Kitco Metals in a note.

On the technical front, gold faced resistance around $1,795.70 and then $1,800.00, while support lay around $1,775.00 and then this week’s low of $1,771.20, the note added.

Reduced stimulus and interest rate hikes push government bond yields up, raising non-interest bearing gold’s opportunity cost.

However, the main narrative remains focused on what the Fed will do and bullion could face pressure if Friday’s U.S. employment data confirms the strengthening of the labour market, said Ricardo Evangelista, senior analyst at ActivTrades.

Data on Wednesday showed U.S. private payrolls increased in November, above Reuters consensus forecast.

Spot silver up 0.7% at $22.65 per ounce.

Platinum gained 1.8% to $951.08 and palladium rose 0.2% to $1,735.43.