LONDON: Gold prices steadied on Tuesday as improved risk sentiment and a firmer dollar offset support for bullion stemming from worries about the economic impact from the Omicron coronavirus variant.

Spot gold was up 0.1% at $1,779.50 per ounce, as of 0944 GMT. US gold futures were little changed at $1,779.20. “With the much more positive mood in the market, gold prices are likely to remain fairly subdued now ... Unless there is a significant deterioration in risk appetite, don’t expect to see gold much above $1,820 in the (near) term,” said Michael Hewson, chief market analyst at CMC Markets UK.

Gold prices could move higher if worries about Omicron resurface, Hewson added. World stock markets and oil prices were boosted by easing worries about the Omicron variant, with shares in Europe rising to their highest in more than a week. The dollar index gained, holding close to a one-week high hit in the prior week, raising gold’s cost for buyers holding other currencies.

However, “gold should slowly tread lower on the prospect of tighter policy, and if (US) CPI comes out hotter than expected, that’s only going to lead to a more aggressive Fed being priced in,” said IG Markets analyst Kyle Rodda. Friday’s US Consumer Price Index report could be crucial in gauging the US Federal Reserve’s next move.

Fed policymakers are likely to accelerate the tapering of their stimulus measures at its policy meeting next week after data showed unemployment plunged last month, suggesting the labour market was tightening. Gold is often considered an inflation hedge, though reduced stimulus and interest rate hikes tend to push government bond yields up, dimming bullion’s appeal.

Platinum rose 1.3% to $949.41 an ounce, palladium added 0.2% to $1,857.75 and silver rose 0.2% to $22.39 per ounce.