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Nov. 26 (Reuters) – Gold prices rose Friday as concerns over the spread of a newly identified coronavirus variant boosted the metal’s safe-haven appeal, though precious metal was set for a weekly decline in growing bets that the US Federal Reserve would be more aggressive could be .
Spot gold rose 0.5% to $1,797.46 an ounce, as of 0445 GMT. US gold futures were up 0.8% to $1,797.70.
The variant, discovered by scientists in South Africa, may have the potential to evade immune responses and has prompted Britain to hastily introduce travel restrictions on the African nation. read more
The dollar index further aided gold’s climb, falling 0.2% from a 16-month high earlier this week, while the US benchmark’s 10-year Treasury yield also weakened.
A weaker dollar lowers the cost of gold for buyers holding other currencies, while lower yields lower the opportunity cost of the non-performing metal.
But the metal has lost 2.6% so far this week, en route to its worst week since August 6, hammered by heightened expectations that the Fed could wind down its asset purchases and raise interest rates at a faster pace. read more
“A rate hike cycle is generally negative for gold, but we need to keep an eye on this new COVID variant – if it spreads to the United States it could weaken growth and I don’t see the Fed rate hikes in that environment. Stephen Innes, managing partner at SPI Asset Management, says.
However, concerns about COVID-related growth and the prospect of faster rate hikes in the US should weaken riskier currencies and ultimately support the dollar, hurting gold, Innes added.
Goldman expects the Fed to double the pace of tapering monthly bond purchases from January to $30 billion and to end those purchases in mid-March.
Spot silver fell 0.1% to $23.56 an ounce. Platinum fell 1.2% to $983.53, while palladium rose 0.9% to $1,877.11.
Reporting by Nakul Iyer in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips
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