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Gold prices continue to rise as Omicron concerns prevail

Gold prices

Gold prices continued to rise, as the US dollar fell with Omicron concerns overshadowing the markets.

Major central banks tend to tighten monetary policies in the face of inflation.

By 7:00 GMT, gold prices rose in spot trading by more than $7, or 0.39 percent, to $1806.44 an ounce.

US gold futures increased by more than $9, or 0.51%, to $1,807.3 an ounce.

Gold prices

On Thursday, gold recorded gains of about 0.3% in spot trading, and one percent in futures contracts.

The dollar index, which measures the US currency performance against six major competing currencies, decreased by 0.09% to 95.9 points.

The rise in gold and the decline in the dollar came despite the decision of the Federal Reserve, on Wednesday, to accelerate the process of reducing its bond purchase program to end in March 2022. This is three months before the previously scheduled date, which was in June.

Federal Reserve announced that it is paving the way to raise interest rates three times by the end of 2022. This is in an effort to confront inflation, which rose to 6.8 percent last November, the fastest pace in 39 years.

European Central Bank

On Thursday, the European Central Bank (ECB) decided to reduce purchases of debt securities. They currently amount to 70 billion euros per month. ECB took the step to stop purchases of debt securities completely in March 2022.

The Bank of England also decided to raise the interest rate by 150 basis points to 0.25% from 0.1%, in the first increase in British interest rates since August 2019.

The withdrawal of stimulus programs and raising interest rates reduce the attractiveness of gold, which does not generate returns, as it raises the cost of acquiring the precious metal.

But fears of the outbreak of the Coronavirus Omicron variant and severe inflationary pressures erased the negative effects of the decisions of major central banks on gold.

US Federal Reserve officials expected inflation to reach 2.6% next year, compared to 2.2% expected last September.

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