Gold steady as investors weigh policy outlook against omicron
BNN Bloomberg
Gold edged higher as investors weighed the outlook for tighter monetary policy against the threat that the Omicron virus variant poses to the global economic recovery.
Gold steadied after its best week in two months as traders weigh the outlook for monetary policy against the threat posed by a fresh coronavirus wave in the U.S.
Facing pressure from Congress and the public to tackle the hottest inflation since the 1980s, a chorus of Federal Reserve officials this month floated raising rates in March and the potential need to hike as many as five times this year, marking a clear shift in projections from just a few weeks ago.
“Market participants are likely to refrain from buying gold ahead of the U.S. Fed’s first rate hike,” Daniel Briesemann, an analyst at Commerzbank AG, wrote in a note. “They may be hoping that the Fed’s meeting next week will give them further and/or clearer signals that the Fed will be commencing its rate hike cycle in March.”
While more central banks globally are seeking to normalize monetary policy to contain price pressures, China on Monday lowered a key interest rate for the first time since the peak of the pandemic in 2020. That came as a property-market slump and repeated virus outbreaks damped the nation’s growth outlook.
Gold is holding above US$1,800 an ounce after dropping for the first time in three years in 2021 as investors started to price in tighter monetary policy. Still, demand for the haven asset has been supported amid concerns over the impact of omicron, with U.S. Surgeon General Vivek Murthy saying the outbreak is likely to worsen and that “a tough few weeks” lie ahead.
