Ounce gold price as rising Omicron coronavirus variant cases offset renewed risks to global economic growth, pressure from a stronger US dollar; It hit a one-week high the other day. So what’s next?
How can the gold price move this week?
Gold is changing hands at $1,817 at the time of writing. Jim Wyckoff, senior analyst at Kitco Metals, stated that the gold outlook in the first quarter of 2022 is optimistic, and said that the main driving force is inflation keeping a floor below prices. “The underlying support comes from inflation concerns. “The Fed’s trend towards a slightly tighter monetary policy seems to have given some relief to gold traders,” he said.
The dollar index rose from its weakest level in nearly a week, making dollar-priced gold less attractive to non-US currency holders. “While the US dollar is stronger, there isn’t much movement in gold today,” said Peter Fertig, Quantitative Commodities Research analyst, adding that one of the main reasons for the lack of liquidity is closed markets at Christmas. Fertig added that higher yields increase the opportunity cost of holding gold, which puts some pressure on gold prices.
Despite the overall calm this week, DailyFX currency strategist Ilya Spivak said, “Low liquidity makes the agenda sentiment more prominent, as if something happens in already weak markets, it will likely cause more tense price action.”