KONTAN.CO.ID - JAKARTA. Gold bounced on Tuesday as market sentiment was dampened after Moderna's CEO warned COVID-19 vaccines were likely to be less effective against the Omicron variant. Spot gold rose 0.5% to $1,794.09 per ounce by 10:41 a.m. ET (1541 GMT), after rising as much as 1.3% earlier in the session. U.S. gold futures advanced 1.1% to $1,805.10.
The Moderna chief's comments rattled financial markets, leading to a slide in global equities. "Gold rallied after we heard from Moderna's CEO and that kind of countered a lot of the early optimism we heard from Pfizer CEO," said Edward Moya, senior market analyst at brokerage OANDA, adding a retreating dollar supported bullion. "The market is anticipating that we could still have an accelerated tapering (by the Federal Reserve), but what that's doing is making the Treasury curve flatter."
Read Also: Oil falls 3% on jitters over vaccine efficacy Gold is used to hedge against inflation, but interest rate hikes raise the opportunity cost of holding gold. Boosting gold's appeal, U.S. benchmark 10-year Treasury yields hit their lowest since late-September. Fed Chairman Jerome warned on Monday that the new COVID-19 strain muddied the central bank's inflation outlook and prices could continue to rise for longer than thought. "The risk-off sentiment is re-gaining momentum, as investors and portfolio managers are still evaluating the potential risk of the Omicron coronavirus variant," said Carlo Alberto De Casa, external analyst at Kinesis Money.
"Investors are betting that this could slow-down the Fed's tapering. Therefore the U.S. dollar is losing ground and the scenario is supportive for gold," De Casa added. The U.S. dollar index fell 0.7% against its rivals, making gold a cheaper bet for overseas buyers. Elsewhere, spot silver rose 0.7% to $23.05 per ounce, platinum dipped 1.4% to $949.37, and palladium shed 0.5% to $1,784.69. Read Also
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