The prices for gold have risen on Friday afternoon’s trading due to concerns over the risk of global economic recovery being potentially hit hard by the new COVID variant, Omicron, which has been first identified in South Africa not too long ago. Many investors start to move over some of their assets to gold as a safe haven.
US gold futures also jumped 1.2 percent to trade at 1,805.20 dollars an ounce.
The variant that is spreading across South Africa may potentially evade the existing immune responses against other preceding variants which pressures the United Kingdom and European Union to halt travels in and out of African countries.
Quantitative Commodity Research (QCR) analyst, Peter Fertig reported, “the market is worried that the new variant may delay the global economic recovery much longer than it was when Delta was discovered last year which is why more are requesting for the gold safe haven.”
Meanwhile, the US dollar index was down 0.4 percent from a 16-month peak earlier this week, reducing the cost of gold for buyers holding other currencies. The yield on the 10-year US bond benchmark also weakened.
On a weekly basis, gold is heading for its worst week since 6th August amid growing expectations that the Fed may reduce its asset purchases and raise interest rates at a faster pace. Reducing stimulus and adding interest rates tend to push government bond yields up, increasing the chances of a loss in holding interest-free gold.