(Bloomberg) -- Gold jumped as investors grappled with the widening spread of a new coronavirus variant as well as inflation that’s proving to be more persistent than previous predictions.
Researchers worldwide are racing to understand the full impact of the omicron strain of Covid-19, first identified in South Africa and detected in countries from the U.K. to Brazil. It’s prompted a raft of restrictions on inbound travelers in an effort to curtail its spread, and sparked concerns about whether it could evade the protection of vaccines and fuel new surges in infections.
“Gold has been relatively choppy lately as the omicron issue has been tough to figure out at the moment, with so little data on it currently,” said Nicholas Frappell, global general manager at Sydney-based ABC Bullion. The market is being “driven by sentiment not epidemiology,” he said.
Investors are also assessing whether the Federal Reserve may step up efforts to curb inflation. Chair Jerome Powell retired the word “transitory” to describe stubbornly high price pressures and said officials should weigh removing pandemic support at a faster pace.
Bullion posted a marginal loss last month as investors weighed the prospects of the Fed dialing back on pandemic-era stimulus amid elevated consumer prices alongside uncertainty surrounding the omicron variant’s impact on the global recovery. The U.S. central bank is currently scheduled to complete its asset-purchase program in mid-2022 under a plan announced at the start of November to slow buying by $15 billion a month.
Spot gold advanced as much as 1.1% to $1,794.48 an ounce and was at $1,788.22 by 6:59 a.m. in London. Prices fell 0.6% Tuesday. The Bloomberg Dollar Spot Index was little changed after declining 0.4%. Silver rose 0.5%, palladium climbed 1.9% and platinum gained 1.7%.
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