Gold wins as Omicron, inflation concerns strengthen the attractiveness as a safe haven

  • Gold and silver set for first weekly win in five
  • Palladium is expanding profits, aiming for 1.5% weekly profit

Dec 17 (Reuters) – Gold surged above the all-important $ 1,800 level on Friday, targeting its first gains in five weeks as concerns over the Omicron’s rise and hot inflation drove investors to safer investments.

Spot gold rose 0.3% to $ 1,804.78 an ounce by 11:01 a.m. ET (1601 GMT) and rose 1.2% this week. US gold futures strengthened 0.5% to $ 1,807.30.

Stocks fell across the board as they were buffeted by a restrictive turn from global central banks trying to contain mounting price pressures and economic risk from rising COVID-19 cases. MKT / GLOB

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“Growth will slow into the next quarter and US stocks are correcting their highs so there appears to be a panic of stocks in safe assets like gold and silver,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

The result of the Fed meeting was a “great cloud of uncertainty” about the precious metals, and now the focus will be on the work data, said Streible.

The Fed on Wednesday announced three rate hikes by the end of 2022, a move that would normally have weighed on gold as higher rates increase the opportunity cost of unprofitable precious metal. Continue reading

But the metal marched higher because the prospect of rate hikes had been priced in ahead of the central bank’s announcement, analysts said.

Rising inflation also dampened the pressure from the restrictive stance of the Fed, ANZ analysts said in a statement.

The gains from gold came despite inflows into the dollar, which is considered a safe store of value even in times of geopolitical uncertainty.

But the outlook for 2022 “remains clouded as most bearish gold forecasts are driven by expectations of much higher real returns,” said Ole Hansen, an analyst at Saxo Bank, in a press release.

Palladium was up 3.1% to $ 1,783.47 while silver was up 0.2% to $ 22.51. Platinum rose 0.5% to $ 941.04.

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Reporting by Ashitha Shivaprasad, Arpan Varghese and Seher Dareen in Bengaluru; Editing by Aditya Soni

Our Standards: The Thomson Reuters Trust Principles.

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