Will Gold Remain Steady As The Dollar Is Under Pressure?

“Gold held steady as the dollar remained under pressure and investors continued to weigh the latest findings about the omicron coronavirus strain and geopolitical risks.

U.S. equity futures gained after several studies showed vaccines provide at least a partial shield against the new variant. That risk sentiment saw the dollar extend Tuesday’s retreat, adding to gold’s appeal.

President Joe Biden warned Russian President Vladimir Putin on Tuesday that the U.S. and its allies would respond with “strong” measures to an attack on Ukraine amid tensions over Moscow’s massing of troops on its border. U.S. and European allies are also weighing penalties that would target Russia’s ability to convert rubles into foreign currencies, including the
dollar.

Bullion is heading for the first annual decline in three years as traders brace for a pullback in pandemic-era stimulus, with the Federal Reserve potentially tapering asset purchases faster than expected. Still, demand for physical gold from India and China has underpinned prices, although the seasonal slowdown at year-end is starting to make the floor a little fragile, according to Suki Cooper, an analyst with Standard Chartered Bank.

“We’re really seeing gold caught between a number of parameters,” Cooper said in a Bloomberg Television interview.

Risks around accelerated tapering have capped the upside, but concerns over omicron’s impact on global mobility and the economic recovery have also given bullion a haven bid, she said.

Traders are awaiting the latest U.S. consumer price index to gauge inflation in the world’s largest economy. Further ahead is the Fed’s December meeting which will be watched for any
changes to the tapering timeline.

Spot gold traded little changed at $1,785.07 an ounce by 1:17 p.m. in London. The Bloomberg Dollar Spot Index was down 0.1%. Silver and palladium declined while platinum was steady.”