The yellow metal rose against the greenback for the second consecutive day on Wednesday and is trading around $1790 at the time of writing. The reason can be linked to the retreat in the U.S. Treasury yields and the dollar eased, with investor now changing their focus to key inflation data due this week that could influence the Federal Reserve’s decision to taper its stimulus at a faster pace.
The rising geopolitical tensions also acts as a catalyst favoring safe-haven precious metal. The U.S. on Monday announced a diplomatic boycott of the 2022 Winter Olympics in Beijing, a move that had garnered bipartisan support from critics of China’s human rights record.
While U.S. athletes will still participate, President Joe Biden’s administration will not send any official representation to the games, given China’s “ongoing genocide and crimes against humanity in Xinjiang and other human rights abuses,” White House press secretary Jen Psaki told reporters.
On a similar note, relations between the US and Russia took a turn for the worse after US President Joe Biden threatened to impose strong economic and other measures on Russia if it invades Ukraine.
Meanwhile Omicron covid optimisms also favors the yellow metal, Increasing scientific evidence that the new Omicron covid variant is less aggressive and, therefore, could pose limited risk to the global economic recovery continues to underpin the market mood.
South African hospitals continue to hint that Omicron has milder symptoms. Additionally, a South African Study showed that the Pfizer vaccine provides partial protection against the new strain. The scientist noted, “study shows a 40-fold reduction in neutralization capacity of Pfizer vaccines vs. Omicron.
Investors will focus on Friday’s U.S. Consumer Price Index (CPI) report, which could have a bearing on decision the Fed takes in its policy meeting on Dec. 14-15.
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