Gold price surges amid uncertainty over new omicron outbreak

Gold futures on the Multi Commodity Exchange (MCX) shot up by 219 per 10gm to reach 47,640 for 10gm in the closing session on Friday. The gold price rise sent investors scurrying for safe havens amid uncertainty over fears of the new coronavirus variant omicron.

“Uncertainty about the possible consequences of the new virus variant clearly reminds the markets that this pandemic is not over yet. The gold price should remain supported in this environment and the topic of tapering should take a back seat for the time being,” Alexander Zumpfe, a precious metals dealer at Heraeus, told Reuters.

Commodity market experts told Live Mint that the outlook for the yellow metal is already bullish because of rising inflation across the globe, the dovish stance of the United States Federal Reserve on interest rate hike and the depreciating Indian rupee against the US dollar. They expected a sharp rise in the yellow metal price and advised gold investors to buy the precious metal for heavy gains in the short term.

Amit Sajeja, vice president of commodity research at Motilal Oswal, was quoted by Live Mint saying that gold price has strong support at $1760 per ounce and currently it is oscillating around $1780 to $1790 per ounce levels.

The risk-reward ratio for gold is around 1:3, which is very attractive, he said, adding that in the coming two to three months, gold prices in the international market may even surge to $1915 per ounce.

“This (omicron outbreak) worked as a catalyst for the yellow metal shine in recent days as rising global inflation and depreciating Indian rupee against the US dollar are already supporting gold prices to surge northward,” Sajeja said.

Despite Friday’s jump, however, gold was still headed for its worst week since mid-September, down 1.8 per cent so far, pressured by increased expectations that the US Federal Reserve could hasten interest rate rises.

At the same time, industrial metals plunged by more than 3 per cent in London on Friday as investors weighed the risk that the new variant identified in South Africa may spur fresh outbreaks and derail growth in the world’s leading industrial economies.

(With agency inputs)

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