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Gold futures on Tuesday edged higher, clinging perilously to a price above $1,800 an ounce as Treasury yields and the dollar added to their gains to start 2022, capping the climb for precious metals.
Some analysts say that bullion continues to draw investment interest from those seeking to hedge against the potential impact of the omicron variant on the parts of the world.
Infections have surged, with the U.S., for example, registering 1,083,948 cases on Monday, according to data collected by Johns Hopkins University—more than double the previous record of 486,428 set four days ago.
“The price of gold is rising this Tuesday, with investors seeking the safety of the precious metal as some countries tighten measures to contain the escalation in the numbers of new omicron cases,” wrote Ricardo Evangelista, senior analyst at ActivTrades, in a Tuesday research report.
February gold
GCG22,
GC00,
was up $2, or 0.1%, at $1,802 an ounce, following a 1.6% decline on Monday, which brought the contract to the lowest for a most-active since Dec. 21, FactSet data show.
“Nevertheless, any gains will be capped by developments in the U.S., where the dollar continues to strengthen on the back of higher Treasury yields, with the markets holding firm to the belief that the Federal Reserve will hike interest rates at least 3 times in 2022,” Evangelista wrote.
At last check, the 2-year Treasury note yield
TMUBMUSD02Y,
was hanging around a 22-month high, at 0.794%.
Market-based projections point to the Federal Reserve starting the process of lifting rates as many as three times in 2022 this spring, when it concludes its asset-purchase program.
The dollar, meanwhile, was trading 0.2% higher on Tuesday and has climbed 0.5% so far in early 2022 to around 96.43, as measured by the ICE U.S. Dollar Index
DXY,
A stronger dollar and rising yields can serve as headwinds for prospective investors in bullion, which doesn’t bear a coupon and is priced in U.S. dollars.
March silver
SIH22,
meanwhile, was trading up 4 cents, or 0.1%, to reach $22.78 an ounce, following a 2.3% drop on Monday.
