Gold Rebounds as Traders Weigh Omicron Against Hawkish Powell

Gold rebounded from a three-week low as traders weighed the spread of the omicron coronavirus variant against comments by Federal Reserve Chair Jerome Powell on the need to curb inflation.

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Researchers worldwide are racing to understand the full impact of the strain, first identified in South Africa and detected in countries from the U.K. to Brazil. It’s prompted a raft of travel restrictions 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 fell Tuesday after Powell said officials should weigh removing pandemic support at a faster pace to manage stubbornly high inflation. He said bond purchases could be wrapped up a few months earlier, and also retired the word “transitory” to describe price pressures.

“Whatever Powell’s position is, that’s not enough to cripple the gold price,” said Tom Price, an analyst at Liberum Capital Ltd. “It’s a nicely balanced market between people who are worried about inflation and those who are worried about tapering.”

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 0.6% to $1,785.39 an ounce by 12:04 p.m. in London, after falling 0.6% on Tuesday. The Bloomberg Dollar Spot Index was 0.1% weaker, extending the previous day’s decline. Silver was little changed, while palladium and platinum gained.