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Gold futures were on the rise Tuesday, with prices topping $1,800 an ounce, as volatility returned to global markets and fresh concerns over the omicron variant pushed investors out of perceived riskier assets such as stocks.
Gold is responding to the “uncertainty surrounding the omicron variant,” Jeff Wright, chief investment officer at Wolfpack Capital, told MarketWatch. Investors are also looking to comments from Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell, who are scheduled to testify before the U.S. Senate banking committee, he said.
“There is suspicion the Fed might be forced to lessen the tapering of asset purchases and interest rate futures are pushing back any interest rate increases to later…in 2022,” said Wright, adding that last week the consensus was an interest rate increase in June.
“The impact of all of these catalysts is gold is moving higher for today, and [there’s a] bias to the upside in short term,” he said. Still, gold may “have difficulty moving much higher than $1,800 before profit taking looms ahead.”
In Tuesday dealings, the most active February gold contract
GCG22,
GC00,
rose $21, or 1.2%, to $1,806.20 an ounce, after settling down 0.2% to $1,785.20 an ounce on Monday. Prices were on track to mark their highest settlement since Nov. 22, FactSet data show.
U.S. benchmark stock indexes traded mostly lower, with the Dow Jones Industrial Average down sharply, and Treasury yields
TMUBMUSD10Y,
were also falling after Moderna’s
MRNA,
CEO Stephane Bancel predicted that current vaccines would struggle against the omicron variant of COVID that has rattled markets.
Speaking to the Financial Times in an interview that published Tuesday, Banel said it would take months to mass produce a vaccine aimed at the new variant if needed. The fresh concern comes a day after stock markets recovered some of Friday’s lost ground.
It is becoming clear that the market’s direction “has now tilted to a more risk-off path,” said Fawad Razaqzada, market analyst at ThinkMarkets.
Meanwhile, Powell made the comments in prepared testimony ahead of a Senate Banking Committee appearance on Tuesday with Treasury Secretary Janet Yellen.
Powell “helped reduce 2022 rate expectations from three to two after he said the omicron virus posed risks to both sides of the central bank’s mandate for stable prices and maximum employment,” Steen Jakobsen, Saxo Bank’s chief executive officer said in a note to clients.
Gold futures also got a boost after data revealed that the Chicago Business Barometer, also known as the Chicago PMI, fell to 61.8 in November from 68.4 in the prior month. It is the lowest reading since February.
The index of consumer confidence also dropped to 109.5 from 111.6 in October, the privately run Conference Board said Tuesday. It was the fourth decline in the past five months.
Back on Comex, the most-active March silver contract
SIH22,
SI00,
rose 46.3 cents, or 2%, to $23.315 an ounce.
March copper
HGH22,
fell nearly 0.1% to $4.34 a pound. January platinum
PLF22,
fell 1% to $954.70 an ounce and March palladium
PAH22,
declined by 0.5% to $1,781 an ounce.
