The price of gold dramatically slipped from $1,866 per ounce on November 18, to $1,788 on November 23.
The drop came as the US President Joe Biden announced his intent to nominate Jerome Powell for a second term as chair of the Board of Governors of the Federal Reserve System.
However, the price of the yellow metal – usually in reverse to the US dollar – is now forming a bullish trend as the new Omicron Covid-19 variant comes as a concern to the global economic recovery.
“Omicron has already prompted some countries to close their borders and cast a shadow on the economic recovery,” reported Investing.com.
“The recent rise in Covid-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation,” the article quoting Powell as saying.
Health officials are racing to determine how transmissible and deadly the new variant is and to what extent current vaccines remain protective.
The US has imposed a travel ban on some nations in southern Africa, where the strain was discovered.
Concern over the recent rise in Covid-19 cases and the emergence of the new Omicron variant “could reduce people’s willingness to work in person, which would slow progress in the labour market and intensify supply-chain disruptions,” Powell told the Senate banking committee, the BBC reported.
Based on such fundamentals, the price of gold could rebound again due to the impact of the Covid-19 variant that could hurt global economic health, particularly that of the US.
Technical analysis suggests the gold price is moving in the range of $1,770 to $1,820 per ounce and creating a box market pattern, meaning that this week investors could wait to buy gold at the key support of $1,780 by setting a stop-loss function at $1,770.