Gold eased off on Monday, resuming a broad decline from the previous week, as the US dollar firmed and risk sentiment recovered with markets still weighing the severity of economic impact that the Omicron variant entails.
Spot gold was down 0.4% to $1,785.28/oz by noon ET, its lowest in nearly a month. US gold futures had a slight decline of 0.1%, trading at $1,783.00/oz in New York.
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A semblance of calm returned to world markets following last week’s selloff, driven by the discovery of the new coronavirus variant that prompted some countries to tighten border controls.
With people trying to digest news about the new covid-19 variant, “the reality of the situation, with equities bouncing back right now and gold kind of flat, is people are into risk-on assets,” Bob Haberkorn, senior market strategist at RJO Futures, said in Reuters report.
With the US Federal Reserve open to the idea of faster tapering, the prospect of higher interest rates, which lift the opportunity cost of holding non-yielding assets, has been weighing on gold over the past week.
Posing additional headwinds for gold was a firmer dollar, making bullion more expensive for overseas buyers, while US Treasury yields also climbed.
Until we get more news about the Omicron and its potential, “the market will continue to trade with uncertainty. That will not only impact some of the markets that depend on demand, like energy and metals and stock markets, but also gold,” Saxo Bank analyst Ole Hansen commented.
(With files from Reuters)