Gold trading reminder: the market reassesses the impact of the new virus, and gold prices are still difficult to break the curse of the thousand and eight

Spot gold edged higher during the Asian session on Tuesday (November 30) and traded near 1787. Gold prices fell slightly on Monday (November 29) as risk sentiment picked up as the dollar and U.S. stocks strengthened, weighing how severe the impact of the Omicron variant virus would be on the economy. But the Omicron strain could lead to high inflation lasting longer, which is expected to give support to gold prices.

Intraday focus is on the Consumer Confidence Index of the Chamber of Commerce, as well as on the Chicago PMI and the speeches of Fed officials.

Fundamentals are bullish

[WHO warns that the Omicron strain could lead to a surge in infections with "serious consequences"]

The World Health Organization has warned that the newly discovered variant of the coronavirus in South Africa could lead to a surge in infections and have "serious consequences," with signs that it has made the coronavirus more contagious.

South African scientists say the new strain appears to be more contagious, but existing vaccines may still prevent the disease from progressing to severe disease. WHO assessed that the risk of the variant was "extremely high" and called on Member States to conduct extensive testing. The WHO says it will take days or weeks to learn about the new strain.

"We don't have enough data to judge the efficacy of the vaccine against the Omicron strain and the severity of the disease, so the various claims at this stage are not evidence-based," said Raina MacIntyre, a professor of global biosafety at the University of New South Wales. "So far, the virus has not evolved in a slighter direction, in fact it is more serious."

Governments around the world have begun barring visitors from South Africa and its neighbors for fears that Omicron could break through vaccine protections, leading to another surge in COVID-19 cases and undermining the reopening process of the economy. While news of the discovery of the new strain on Friday wreaked havoc on global markets, trading during Monday's Asian session showed investors waiting for the situation to become clearer.

In a technical briefing paper for Member States, WHO said the mutation in Omicron could make it easier for the virus to evade existing immune protections, and the WHO warned that in the future "the number of COVID-19 infections will surge and could have serious consequences".

[Fed Powell warns inflation to last longer than expected]

Fed Chairman Jerome Powell said Monday that he expects high inflation to subside next year as supply and demand balance, but he warned that the emergence of a new variant of the coronavirus has obscured the outlook and that price increases could last longer than previously anticipated.

"It's hard to predict how long and how long the supply constraints will last, but it now appears that the factors driving inflation will continue into next year," Powell said in testimony that will be released by the U.S. Senate Finance Committee on Tuesday. The Fed on Monday released the text of the speech prepared for the testimony.

He said the economy continued to strengthen and the labor market improved, pushing up wages.

Powell added that the recent increase in COVID-19 cases, as well as the emergence of a new Omicron variant virus, poses "downside risks" to employment and economic growth and "increases uncertainty about inflation." He noted that health-related concerns could "reduce people's willingness to go out and work, which will slow progress in the job market and exacerbate disruption in supply chains."

The Fed began reducing its support for the economy this month and gradually reducing asset purchases, which, if sustained, will stop buying in June.

But with inflation more than double the Fed's 2 percent target, Fed officials are increasingly saying they are open to potentially accelerated drawdowns to bond purchases to clear the way for an early rate hike if needed.

Powell did not mention a reduction in the bond-buying schedule in his prepared remarks, but he did say that the job market has "places to cover" before reaching full employment, one of the conditions set by the Fed before considering raising interest rates from the current near-zero level.

Powell promised that the Fed, "committed to achieving our price stability goal," will do everything in its power to support the economy and the job market, and "prevent rising inflation from becoming difficult to reverse." ”

Fundamentals are bearish

[The dollar rises, Omicron worries ease the yen and Swiss franc back]

The dollar strengthened on Monday and the safe-haven yen and Swiss franc weakened, reversing some of Friday's trend as governments around the world sought further information on the latest coronavirus variants and their impact.

The Omicron variant, originally discovered in South Africa, sparked a financial market sell-off on Friday amid fears it would further disrupt the ongoing accelerating economic recovery two years after the pandemic raged.

The World Health Organization said Monday that the risk of the variant leading to a surge in infections was high, with more countries closing their borders.

U.S. President Joe Biden said the lockdown would not be reintroduced this winter, but he urged people to be vaccinated, given boosters and wearing masks.

Market volatility abated on Monday, with U.S. stocks and oil prices rebounding, and investors held a more balanced view, waiting for the impact of the variant to become clearer.

The dollar index edged up to 96.18, its biggest one-day drop since May on Friday.

The dollar's safe-haven status means it benefits from uncertainty, but the dollar fell on Friday as investors believed the Omicron variant could affect the timing of the implementation of the Fed and other major central bank rate hikes.

[U.S. stocks rebound higher, after Biden promised not to impose another blockade due to new variants]

U.S. stocks closed higher on Monday, recovering some of the losses recorded in Friday's sell-off as investors hoped the Omicron variant virus would not lead to a blockade after U.S. President Joe Biden gave assurances.

The Nasdaq led the gains in major stock indexes with the help of the tech sector, while the S&P and Dow rose, recording their biggest one-day percentage drop in months in Friday's trade, which was shortened by the holiday, as investors feared the latest coronavirus variant would lead to economic disruption.

Biden said Monday that the Omicron-related blockade is not currently under discussion, and he urged Americans not to panic about the mutant virus. But he recommends getting vaccinated and wearing masks indoors to fight the virus, and he said the U.S. is working with pharmaceutical companies to develop contingency plans if new vaccines are needed.

The remarks and signs that pharmaceutical companies are taking the variant seriously reassure investors that they have previously feared that further restrictions could be taken.

"Last Friday was a significant risk event that brought the market back to its most serious concerns about the spread of COVID-19 and the resumption of lockdowns," said Edward Moya, senior market analyst at OANDA.

Pfizer and its partners BioNTech, as well as other vaccine makers Moderna and Johnson & Johnson, said Monday they were working on a vaccine specifically targeting Omicron in case existing vaccines were ineffective against the variant.

【U.S. second-hand housing signings rebounded to the highest level of the year】

A forward index that measures U.S. residential transactions rebounded from a 10-month high in October, suggesting that housing demand is stable despite rising concerns about the ability to buy homes for many potential buyers.

The National Association of Realtors released data on Monday showing that the index of second-hand home signings rose 7.5% month-on-month to 125.2 in October. Economists surveyed expected a median increase of 1 percent.

Lower mortgage rates and solid job growth have supported housing demand this year as pandemic-fearing buyers seek wider living space. Lawrence Yun, chief economist at the National Association of Realtors, said second-hand home sales are expected to exceed 6 million units a year, the highest level in 15 years.

However, due to the limited number of listings (especially lower-priced second-hand homes), competition is fierce, resulting in prices that are beyond the reach of many potential buyers. Supply chain delays and labor shortages have affected construction schedules, making it difficult for builders to fill vacancies and exacerbating inventory tensions.

"Rapid rent increases and expected rises in mortgage rates have prompted financially sound consumers to sign contracts to buy a home as early as possible," Yun said in the announcement. "This strong buying proves that demand is still relatively high, while inventories are still quite low."

Overall, the market continues to assess the impact of the new virus, which creates uncertainty for the gold price in the short term, and the gold price may continue to fluctuate sideways. It is also worth noting the impact of the new virus on the policies of central banks, and if the virus causes countries to resume lockdown measures, it will once again hit fragile supply chains hard, keeping inflation at a high level.

This article originated from Huitong Network