Gold pauses after safe haven rush sparked by new virus variant

[BENGALURU] Gold steadied on Friday (Nov 26), taking a breather after an over 1 per cent rally sparked by a rush into safe-havens as concerns over a new coronavirus variant rattled risk appetite.

Spot gold rose 0.2 per cent to US$1,791.97 per ounce by 6.49pm GMT, after going up as high as US$1,815.26. US gold futures settled 0.1 per cent higher at US$1,785.5.

Authorities globally reacted with alarm to the virus variant, with the EU and Britain among those tightening border controls as researchers sought to establish out if the mutation was vaccine-resistant, triggering a selloff across markets that seeped into oil and other precious metals.

But after the rally due to bullion's safe-haven appeal, the overall bearish turn in commodities eventually claimed gold as well, said Jim Wyckoff, senior analyst at Kitco Metals, adding the market reaction was probably overblown.

Supporting gold and even capping the eventual retreat, was a sharp pullback in the dollar and lower US Treasury yields.

"Gold price should remain supported in this environment and the topic of (Fed) tapering should take a back seat for the time being," said Alexander Zumpfe, a precious metals dealer at Heraeus.

Gold was still headed for its worst week since mid June, down 2.9 per cent so far, pressured by expectations that the US Federal Reserve could hasten interest rate rises, raising the opportunity cost of holding non-interest-bearing bullion.

Other precious metals, meanwhile, seemed to have decoupled from gold's moves, with silver dipping 1.9 per cent to US$23.14.

Platinum fell 4.3 per cent to US$952.77 while palladium dropped 6 per cent to US$1,747.95, en route to big weekly declines.

Palladium earlier slid over 8 per cent to its lowest since Mar 23, 2020.

Quantitative Commodity Research analyst Peter Fertig attributed palladium and platinum's declines to fears the new variant could hurt the economy again, including car sales and demand for the metals used in automobile exhaust systems.

REUTERS