• Gold heads for worst week since early August
  • Goldman expects Fed to end bond purchases by mid-March

Nov. 26 (Reuters) – Gold prices rose on Friday, as concerns over the spread of a newly identified coronavirus variant heightened the metal’s appeal as a safe haven, although the bullion was slated for a weekly drop on rising bets that the US Federal Reserve could become more hawkish.

Spot gold was up 0.5% at $ 1,797.46 an ounce, at 4:45 am GMT. US gold futures rose 0.8% to $ 1,797.70.

The variant, detected by scientists in South Africa, may be able to evade immune responses and prompted Britain to hastily introduce travel restrictions on the African nation. Read more

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Further contributing to the rise of gold, the dollar index fell 0.2% from a 16-month high reached earlier this week, while 10-year US Treasury yields also weakened .

A weaker dollar lowers the cost of gold for buyers holding other currencies, while lower yields decrease the opportunity cost of unproductive metal.

But the metal has lost 2.6% so far this week, heading for its worst week since August 6, hammered by heightened expectations the Fed could cut asset purchases and raise interest rates at a faster rate. Read more

“A rate hike cycle is generally negative for gold, but we need to keep an eye out for this new COVID variant – if it spreads to the US it could weaken growth and I can’t see the Fed increasing rates in this environment, “said Stephen Innes, Managing Partner of SPI Asset Management.

However, growth concerns related to COVID and the prospect of faster U.S. rate hikes should weaken riskier currencies and ultimately support the dollar, hurting gold, Innes added.

Goldman expects the Fed to double the pace of cutting its monthly January bond purchases to $ 30 billion, and end those purchases by mid-March.

Spot silver fell 0.1% to $ 23.56 an ounce. Platinum fell 1.2% to $ 983.53, while palladium rose 0.9% to $ 1,877.11.

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Report by Nakul Iyer in Bangalore; Editing by Subhranshu Sahu and Sherry Jacob-Phillips

Our Standards: The Thomson Reuters Trust Principles.

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