The price of gold, which is one of the safe-haven assets, reacted rather differently to the proposed lockdown and other measures governments intend to implement to contain the Omicron variant of COVID-19.
Naturally, when the US dollar falls, gold rises, and vice versa. Gold has always been a way in which investors hedge their wealth against inflation. So it wasn’t surprising when the global market panicked about the new COVID-19 variant and its price edged higher.
This move was even more exasperated by the doldrums of the Federal Reserve Chairman, Jerome Power, who told the US Congress on Monday that the new variant poses a threat to the economy, citing downside risks to employment and economic activity and increased uncertainty for inflation.
Added to this was the statement from Moderna CEO Stephane Bancel, who expects existing vaccines to be less effective against the Omicron variant.
As a result of an early morning panic and large-scale uncertainties, gold edged up above $1,790 an ounce on Tuesday morning.
Earlier, the South African doctor who first raised the alarm over the new strain described the symptoms as "extremely mild," while the WHO said it may take weeks to understand how the variant may affect diagnostics, therapeutics, and vaccines.
Meanwhile, a statement from US President Joe Biden said that the US was in a good position to control Omicron’s potential spread without having to resort to lockdowns or more travel bans for now.
The global economy is afraid of going into another lockdown, as seen with the numerous lockdowns carried out late last year. The IMF still forecasts less than 5% growth because of the COVID-19 lockdown last year.
According to analysts at Trading Economics, gold is expected to trade at 1772.25 USD/t oz. by the end of this quarter.
Looking forward, we estimate it to trade at 1712.38 in 12 months' time. Historically, gold reached an all-time high of 2074.88 in August of 2020.
|DANGOTE CEMENT PLC||241.00||265.00||9.96|
|NEM INSURANCE PLC||3.74||4.11||9.89|
|JAPAUL GOLD & VENTURES PLC||0.34||0.37||8.82|
|MAY & BAKER NIGERIA PLC||3.57||3.88||8.68|
|CONSOLIDATED HALLMARK INSURANCE PLC||0.58||0.63||8.62|