Uncertainty has hit the market again in line with the development of the Omicron COVID variant. Gold prices fell slightly in a consolidation phase.
Gold prices fell in the trading session Monday (29/November) evening due to the recovery of market risk appetite. However, concerns over the impact of Omicron's COVID variant kept gold prices in a consolidative movement.
Spot gold fell 0.4% to $1784.41 an ounce, continuing last week's 2.9% decline and the biggest weekly decline since June. On the Comex in New York, the price of gold futures did not change significantly and was trading at around $1786.30. Meanwhile, the following XAU/USD chart shows a move at $1784.13.
Omicron Emergence Raises Uncertainty
The prospect of a Fed rate hike has so far been the main reason for investors to buy up high risk assets and the US Dollar. However, with the spread of the new variant of the Corona virus, the chance of Rate Hike has also decreased and cannot be determined again until there is more accurate news regarding the Omicron variant.
"The market will continue to trade in uncertainty. That will have an impact not only on the part of the market that relies on demand, but also on gold," commented Ole Hansen at Saxo Bank.
Hussen Sayed of Exinity Group shared a similar opinion. According to him, the current gold price will take a hint from interest rate expectations. Given the market's expectations of a decrease from three times the Fed Rate Hike to only two times, the gold price may be supported. However, the movement will not be significant for the time being.
Last week, when the WHO just announced a new variant of COVID-19 dubbed Omicron as the Variant of Concern, gold prices soared by more than 1% as investors sought safe havens amid uncertainty. Although newly discovered in South Africa, Botswana, Hong Kong, and a number of other countries, the Omciron variant is thought to be five times more infectious than the Delta variant.
However, the surge in gold prices did not last long because it was only a spontaneous reaction to market panic. In addition, the price movement at that time seemed very significant due to the low trading volume in connection with the Thanksgiving holiday in the US.
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