Gold prices rise as fears of a new spread of the Corona virus escalate

  • 26 November, 2021
  • 5:32 pm EET

Gold prices rose in trading today, Friday, as fears of the spread of a new type of emerging Corona virus strengthened the metal’s attractiveness as a safe haven.

This comes even though the yellow metal is set for a weekly decline on the back of increasing bets that the US Federal Reserve will accelerate the pace of stimulus cuts and raise interest rates sooner to curb rising inflation.


Gold Prices Today

The price of gold futures contracts for February delivery increased by 0.93%, to reach the level of $1803.5 an ounce.

The spot price for the yellow metal also rose by 0.83%, recording $1,801.30 an ounce.

At the same time, the price of silver futures contracts – for March delivery – decreased by 0.24%, to $23.48 an ounce.

The spot platinum price also declined by 2.42%, recording $974.59 an ounce, and the spot palladium price decreased by 2.65%, to $1814.46 an ounce.

Also helping gold prices rose, the dollar index fell 0.2% from a 16-month high hit earlier this week, while the 10-year US Treasury yields also declined.

A weak dollar reduces the cost of gold to buyers who own other currencies.


Corona Virus

The diversified spread of novel coronavirus infections in South Africa may block immune responses, and lead Britain and a growing number of other countries to hastily impose travel restrictions on the African nation.

Gold is heading for its worst week since August 6, due to growing expectations that the Federal Reserve may reduce its asset purchases and raise interest rates at a faster pace.

The Fed is likely to double the pace of reducing its monthly bond purchases from January to $30 billion, and end its pandemic-era bond-buying scheme by mid-March, Goldman Sachs strategists said in a note Thursday.

“The rate hike cycle is generally negative for gold, but we have to watch this new kurna variant; if it spreads to the US, it could dampen growth and I can’t see rates,” says Stephen Innes, managing partner at SBB Asset Management. Raise the Fed in that environment.”

Lower stimulus and higher interest rates tend to push up government bond yields, raising the opportunity cost of zero-interest gold.


Fed Moves

Director of corporate advisory firm Air Good, Michael Langford, expects gold prices to fall further due to increased chances of the US Federal Reserve’s commitment to schedule cutbacks.

“The Fed is unlikely to change its rolling schedule, as monetary policies are closely intertwined with the government’s general sense that any change would be negative for the outlook for the upcoming elections, limiting gold’s decline,” he said.

The European Central Bank is under pressure from bankers to lend more of its German government bonds, to avoid market pressures that would roll back some of its stimulus efforts.

A survey showed that an increase in coronavirus infections in Germany and high inflation are weighing on consumer sentiment in Europe’s largest economy, weakening business prospects for the upcoming Christmas shopping season.

China’s net gold imports through Hong Kong jumped to the highest level since June 2018 last October, as buyers stockpiled the metal’s largest consumers as a way to mitigate rising inflation.




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