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Price of Gold Fundamental Daily Forecast – Rallies as Safe-Haven Dollar Retreats on Optimistic Omicron News

By:
James Hyerczyk
Published: Dec 23, 2021, 17:14 UTC

There still appears to be enough worries about the strength of the economy and the pace of U.S. rate hikes in 2022 to keep gold prices underpinned.

Comex Gold

In this article:

Gold futures are posting a modest gain on Thursday but off its high. The market is being capped by firm Treasury yields, but supported by a slightly weaker U.S. Dollar. Volume is well-below average with most major players on the sidelines ahead of the long Christmas holiday weekend. The market is also in a position to post a second straight weekly gain with trading ending this week on Thursday.

At 17:05 GMT, February Comex gold futures are trading $1808.80, up $6.60 or +0.37%. The SPDR Gold Shares ETF (GLD) is at $168.87, up $0.28 or +0.17%.

Treasury Yields Rise as Investors Digest Omicron Data

Treasury yields rose on Thursday, ahead of the long holiday weekend, as investors assessed the omicron threat.

The yield on the benchmark 10-year Treasury note rose 4 basis points to 1.498%, while the yield on the 30-year Treasury bond ticked up to 5.4 basis points to 1.911%.

The bond markets are closed on Friday, December 24 for the Christmas holiday.

US Dollar Falls on Positive Omicron Developments

Gold is being supported by a weaker U.S. Dollar. The dollar is weakening because positive news on Omicron is dampening its appeal as a safe-haven currency, encouraging traders to reduce their hedges.

Dollar sellers are taking direction from some positive news on the omicron Covid variant. A study from South Africa, published Tuesday, indicated that people infected with the omicron variant were 80% less likely to be admitted to hospital than if they contracted other strains.

Elsewhere, studies from Scotland and England appear to back up the South Africa findings.

Meanwhile, the FDA authorized Pfizer’s COVID treatment pill on Wednesday – making it the first oral antiviral drug cleared since the start of the pandemic.

US Economic Reports:  Improving Labor, Spending, but Inflation Still High

Thursday’s slew of economic data showed a stable economy with improving labor and spending trends, but inflation at high levels.

Jobless claims for the week ended December 18 came in roughly as expected at 205,000. Durable goods for November rose 2.5%, compared to the 1.5% Dow Jones estimate. Personal income and spending showed increases for November.

But on the inflation side, the Federal Reserve’s closely watch core personal consumption expenditures index rose 0.6% in November from the month prior. Core PCE rose 4.7% year-over-year in November, higher than the 4.5% rate expected.

Short-Term Outlook

Short-term, there still appears to be enough worries about the strength of the economy and therefore, the pace of U.S. rate hikes in 2022 to keep gold prices underpinned.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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