Even as the dollar stabilizes and the appetite for riskier assets eases fears over a fallout from the Omicron coronavirus variant, gold prices are hovering around the key $1,800 ahead of the year-end holidays on Thursday.
“Geopolitical risks potentially support gold”
“This is just noise on a low-volume day before Christmas,” comments Daniel Pavilonis, senior market strategist at RJO Futures. The strategist adds that next year will be good for gold, especially as high inflation is likely to continue.
The dollar index, which glowed slightly more than bullion, stabilized, making the metal less attractive to overseas buyers. But the dollar was close to a one-week low and its recent pullback has helped keep gold on track for a small weekly gain.
Global stocks, bond yields and riskier currencies hit all-time highs on Thursday as investor confidence rose amid strong US economic data alongside signs that Omicron may be less severe than feared. Nicholas Frappell, global general manager of ABC Bullion, comments:
Gold faces technical resistance at $1,815 and $1,826 and geopolitical risks provide potential support for gold despite the waning narrative.
What is the main driver for the gold price to rise above $1,800 again?
cryptocoin.com As you can follow from our news, earlier this month, the US Federal Reserve signaled that the inflation target was met and paved the way for rate hikes by 0.25% until the end of 2022. While bullion is seen as a hedge against inflation, rate hikes result in higher opportunity costs of holding non-yielding gold. Investors also follow developments surrounding Russia’s standoff with Western powers over Ukraine.
Weak trading and Christmas purchases are keeping gold above the $1,800 level, says AirGuide corporate advisory director Michael Langford. He adds that the rise in risky investments called the ‘Santa Claus rally’ before Christmas has created short-term positivity for the metal.
According to UBS analyst Giovanni Staunovo, the main driver of gold’s rebound above $1,800 is rising US inflation expectations, as measured by breakeven.
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