Gold scaled a six-week high before it gave up gains to trade flat on Monday, as safe-haven buying fuelled by an Omicron-driven surge in Covid-19 infections countered pressure from higher US treasury yields.
Spot gold was little changed at $1,826.58/oz by 3.13am GMT, after hitting it highest since November 22 at $1,831.49 earlier in the session. US gold futures were down 0.1% to $1,826.70.
“Gold prices would not free-fall as real rates and real yields would remain very close to zero until the coast is all clear from the strains of Covid-19,” Phillip Futures analyst Avtar Sandu said in a note.
Continued focus on the Ukraine border with Russia had brought investors’ interest back to gold as a safe haven, and a weaker dollar provided further support to the metal, he added.
Benchmark 10-year US treasuries ended 2021 with the largest yield increase since 2013. Higher yields raise the opportunity cost of holding non-interest paying gold.
The US dollar index held close to one-month lows touched last Friday, boosting gold’s demand by making the metal cheaper for buyers holding other currencies.
More than 4,000 flights were cancelled around the world on Sunday, with more than half of them US flights, adding to the toll of holiday week travel disruptions due to adverse weather and the surge in Covid-19 cases.
US President Joe Biden told Ukraine’s President Volodymyr Zelenskiy that the US and its allies would “respond decisively” if Russia further invaded Ukraine, the White House said in a statement.
Spot gold faced resistance at $1,830/oz, and it may hover at that level or retrace towards a support at $1,815, according to Reuters technical analyst Wang Tao.
Spot silver shed 0.5% to $23.15/oz, platinum gained 0.4% to $966.00/oz, and palladium rose 0.4% to $1,899.81/oz.