Gold holds advance as Omicron threat adds to risks for global growth
NEW YORK: Gold held onto Friday’s gain amid risk-off sentiment as investors weigh mixed labour data from the United States, the Federal Reserve’s (Fed) hawkish tilt and the threat of the Covid-19 Omicron variant.
Data on Friday showed that US job growth registered its smallest increase this year while the unemployment rate fell by more than forecast to 4.2 per cent, offering a mixed picture that may nevertheless push the Fed to quicken the wind-down of pandemic stimulus.
It came after chair Jerome Powell signalled faster tapering of asset purchases amid elevated inflation.
Meanwhile, Goldman Sachs Group Inc economists cut their forecasts for the US economy this year and next after deciding that the spread of the Omicron strain of the coronavirus would exert a “modest downside” drag on growth.
Moderna Inc president Stephen Hoge said there was a “real risk” that existing Covid-19 vaccines would be less effective against Omicron, while US medical adviser Anthony Fauci said the variant’s severity may be limited.
Bullion climbed on Friday to
pare a third straight weekly loss, the longest stretch since September, amid the prospects of less accommodative monetary policy and Omicron risks.
US consumer prices due this Friday are projected to show the largest annual advance in
decades, keeping pressure on the Fed to deliver swifter tightening.
“Gold is still struggling to break above the US$1,800 level and we are yet to see any significant safehaven flows from the recent Omicron development,” said John Feeney, business development
manager at Sydney-based bullion dealer Guardian Gold Australia.
“Gold investors will be paying very close attention to the US inflation numbers out this Friday, so we might see a reaction if we get another beat to the upside.”