Gold restrained as dollar, Omicron concerns offset improved risk appetite

  • 12/22/2021
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U.S. Treasury yields steady near 1-week high Gold market is expected to be choppy to year-end - analysts UK"s Q3 GDP data disappoints Dec 22 (Reuters) - Gold prices were confined to a small range in seasonally-quieter trading on Wednesday, tracking a choppy dollar, as safe-haven demand fuelled by the rapidly spreading Omicron coronavirus variant countered a higher risk appetite. Spot gold was last up 0.1% at $1,787.83 per ounce by 1203 GMT, while U.S. gold futures added 0.1% to $1,791.00. "You have conflicting signals," said Quantitative Commodity Research analyst Peter Fertig, noting that for gold, pressure from firm government bond yields was being neutralised by support from weakness in UK equities after downbeat GDP data. Official data on Wednesday showed Britain"s economy expanded more slowly than previously thought in the July-September period, nudging UK shares lower. read more But investor sentiment elsewhere remained positive heading into the year-end, with both Asian and European shares gaining despite rising COVID-19 cases. Although Omicron concerns abound, the lack of overtly distressing symptoms provides some relief, which is a reason for a move towards riskier assets, said Stephen Innes, managing partner at SPI Asset Management. After spending much of the session steady or slightly higher, the dollar index (.DXY) inched lower against its rivals, making gold less expensive for buyers holding other currencies. Benchmark U.S. Treasury and German government bond yields remained near recent highs, weighing on gold as higher yields increase the opportunity cost of holding bullion, which pays no interest. Broadly speaking, however, "with trading volume thin and major players away ahead of the year, the gold market is expected to be choppy ... Momentum is lacking and prices most likely consolidate with the comfortable range," Phillip Futures analyst Avtar Sandu said in a note. Spot silver gained 0.6% to $22.63 per ounce, platinum was up 0.5% to $939.21 and palladium rose 2.1% to $1,829.13.

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