The price of gold is supported by the political conflict in the US. However, risk appetite overriding the Omicron impact and minimal trading volume ahead of the Christmas holidays limited gold's gains.
Gold prices rose due to the weakening of the US Dollar amid political uncertainty. In Wednesday's trading session (22/December) this evening, XAU/USD was up nearly half a percent to $1797.19, bouncing off the previous three days' losses.
Spot gold rose 0.2% to $1792.56 an ounce, while gold futures for February delivery edged up to $1792.90 on the Comex in New York. Gold trading volume in the market generally seems low ahead of the Christmas and New Year holidays.
Avtar Sandu, an analyst at Phillip Futures, said that gold prices will move choppy in the short term. "With low trading volume and big players 'stepping away' ahead of the (new) year, the gold market is expected to be choppy. Momentum is lacking, so prices are likely to consolidate within a comfortable range," said Sandu.
US Politics Again Turbulent, Gold's Rise Only Temporary
The weakening US dollar is a breath of fresh air for gold to gain price increases. Political chaos in the US government makes gold hunted by investors to seek safe havens. Senator Joe Manchin said he was unwilling to support the Biden administration's $1.75 trillion package of domestic investment bills. In fact, Manchin is considered to have influence for President Biden to pass the investment bill. Manchin's actions sparked new uncertainty.
Despite the tensions in the White House, markets are starting to rule out any further Omicron impact. They are more optimistic about the economic outlook. Risk appetite is rising as stocks in Asia and Europe are green, outperforming the US Dollar.
"Despite the growing concern over Omicron, the lack of disturbing symptoms provides some relief. That is a reason to move towards risk assets," commented Stephen Innes, Managing Partner at SPI Asset Management. This supports the view that the rise in gold prices is likely to be limited.
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