Gold prices slipped from a one-week high in thin trading on Tuesday, as easing concerns over the Omicron coronavirus variant and strong U.S. retail sales data boosted risk appetite.
Spot gold was down 0.1% at $1,809.68 per ounce by 0457 GMT, after hitting its highest since Dec. 17 on Monday. U.S. gold futures were up 0.1% at $1,810.90.
“There’s lack of participation. So, any little nugget of cross-market correlation is going to make markets move,” said Stephen Innes, managing partner at SPI Asset Management.
“What the crux of the argument will be, and probably limit gold’s upside momentum, is real rates, which could rise as the economy recovers from this little slip they’ve had on Omicron.”
Asian shares gained, cruising in the slipstream of another record-setting day on Wall Street amid strong retail figures, while the safe-haven yen lost ground as traders stayed in riskier currencies and asset classes like equities.
Crude oil prices gained ground on expectations the Omicron variant would have only a limited impact on global demand.
The U.S. dollar, also viewed as a safe-haven, languished near the bottom end of its recent trading range versus a basket of peers, maintaining the greenback-priced gold’s appeal for holders of non-U.S. currencies, and limiting losses.
The two-year Treasury yield, which is very sensitive to interest rate expectations, leapt to the highest in almost 22 months in Tokyo, increasing the opportunity cost of holding bullion, which pays no interest.
Aggressive tapering by some central banks is limiting the upside in gold, but the downside hasn’t been as severe as in the past, so the fundamental strength of gold is visible, Kunal Shah, head of research at Nirmal Bang Commodities said.
Spot silver fell 0.2% to $22.99 an ounce, platinum eased 0.2% to $968.14, and palladium dropped 0.9% to $1,952.05.