Gold finds support at $1798 and moves higher as Omicron variant surges
A tremendous spike of Covid-19 infections in the United States has broken previous records with 1 million new infections on Monday, according to the John's Hopkins University of Medicine. According to the CDC, the new variant "omicron" represents 95% of all new cases in the U.S.
According to Reuters, "The United States set a global record of almost 1 million new coronavirus infections reported on Monday, according to a Reuters tally, nearly double the country's peak of 505,109 hit just a week ago as the highly contagious Omicron variant shows no sign of slowing. The number of hospitalized COVID-19 patients has risen nearly 50% in the last week and now exceeds 100,000, a Reuters analysis showed, the first time that threshold has been reached since the winter surge a year ago."
According to the World Health Organization, the good news is "evidence thus far suggests Omicron is causing less severe illness. Nevertheless, public health officials have warned that the sheer volume of Omicron cases threatens to overwhelm hospitals, some of which are already struggling to handle a wave of COVID-19 patients, primarily among the unvaccinated."
The surge in new infections coupled with a weaker than expected U.S. manufacturing report was the primary component that took gold higher today. The ISM manufacturing index was forecasted to come in at 60.0%. However, the actual number came in below that at 58.7%. The ISM report clearly showed that growth amongst U.S. manufacturers is slowing faster than expected. The concern is that inflationary pressures will continue to grow and stifle economic recovery.
As of 4:23 PM EST gold futures basis, the most active February contract is fixed at $1814.90 after factoring in today's gain of 0.82%, or $14.80. Silver also had strong advances today with the most active March 2022 contract currently up $0.28 and fixed at $23.09.
On Friday, the U.S. Labor Department will release the jobs report for December 2021. This will certainly be the most important report that comes out this week. Current forecasts from economists polled by various new sources are indicating that the unemployment rate will decline to 4.1% and that the United States will have filled an additional 410,000 jobs. This is after a tepid jobs report last month which showed that only 210,000 new jobs were added in November.
The forecasted numbers for Friday's jobs report are currently being baked into the current pricing of the financial markets, including the precious metals. If the actual numbers come in well under the forecasted predictions, we could see a continuation of solid bullish market sentiment for gold and silver. However, if they come in at or above the forecasted projections, it could certainly diminish the bullish market sentiment that currently exists in both metals.
By Gary Wagner
Contributing to kitco.com
Time to buy Gold and Silver on the dips
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