Gold prices stayed close to a six-week high on Monday after a surge in Omicron cases fueled safe-haven buying. Concerns over the impact of the coronavirus overshadowed the rise in U.S. yields. Benchmark 10-year U.S. Treasury posted the highest yield increase in nine years. But it was not enough to push bullion prices down. The soft dollar also supported the yellow metal. The greenback held steady near a one-month low and boosted gold’s appeal to investors using rival currencies.
Spot gold is currently trading at $1,821.52 per ounce as of 0840 GMT.
The rapid spread of the Omicron coronavirus dampened Christmas and New Year celebrations. More than 4,000 flights were canceled, more than half of which were U.S. flights. Worldwide Omicron infections reached a record high over the past seven days. An average of over a million cases were reported daily between December 24 and December 30.
Jigar Trivedi, a commodities analyst at Anand Rathi Shares, suggested that gold prices are rising sharply due to the increasing number of Omicron cases. Today’s trading is still thin because most markets are still closed. He predicted gold prices to remain in the $1,815-$1,830 range in the near term.
DailyFX head strategist Ilya Spivak added that gold prices are attempting to move up around the $1,800 level. He predicted an immediate resistance at $1,808.16 then $1,834 and $1,871. Key supports are at $1,679.91, $1,750.78 and $1,818.89, he said.
Another factor supporting gold’s upward momentum is the geopolitical tension in Ukraine. On Sunday, U.S. President Joe Biden assured his Ukrainian counterpart Volodymyr Zelesnky that the “United States and its allies and partners will respond decisively if Russia invades Ukraine.” He also stressed Washington’s commitment to the “nothing about you without you” principle. High-ranking U.S. and Russian officials will meet in Geneva on January 9 and 10 to discuss the crisis.
In physical trading, gold consumers in Asia held back purchases due to new Omicron-related restrictions. Gold discounts in India reached a five-month high during the last week of 2021. Jewelers reduced their inventories as states impose curbs on weddings and other gatherings because of the rising COVID-19 cases. In China, gold demand was also muted. But analysts expect it to pick up ahead of the Chinese New Year.