Another week comes to an end and the COVID virus now in the form of Omicron continues to leave its mark. What remains this week is the volatility in the gold market, after the jump over $1800 has worked towards the beginning of the week, the yellow metal quickly found itself again in the direction of $1750. Whether it is Omicron, the sell-off in the U.S. stock market, or another flood of paper gold, the gold market remains volatile.
Federal Reserve Chairman Jerome Powell signaled that the Fed may begin tapering its pandemic stimulus measures and is also considering a change in interest rate policy. Experts criticize the Fed that these are just empty words, as the Fed is trapped in its own measures. The main argument is that a significant change in interest rate policy could be massively damaging to the U.S. economy. In fact, since the banking crisis of 2008/2009, the Fed has already tried to scale back QE but quickly found itself in a downturn of the economy.
However, investors’ concerns about Omicron led them to buy gold as a safe haven. This helped the price of the yellow metal rise above $1,780 and also gain on the New York futures market on Friday.
Gold futures were up $21.20, or 1.2%, at $1,783.90 per ounce.
We can also trace the strength of gold to the decline in 10-year government bonds, which fell by more than 6% yesterday, whereas the dollar is rising.
The IMF said that variants such as Omicron may have contributed to the IMF’s decision to lower its global growth forecast for October. A decision was made after the long-running effects of the Covid-19 delta variant.
Gold Price Does Not Yet Indicate a Breakout
Whether it is a curse or a blessing for gold investors that gold prices still remain at low levels since the all-time high in 2020, obviously gold investors are waiting for the gold price to respond to rising inflation and negative real interest rates. What remains, however, is the blessing that gold prices still remain at a price level where one can still afford gold and that should please gold investors.
The Spot Market is Closed
Saturday, December 4, 2021