New COVID variant confirmation sending gold prices higher

Confirmation of a potentially vaccine-resistant new COVID-19 variant found in South Africa is giving the gold bulls lots of momentum today and could see gold moving substantially higher in the near term.

The yellow metal gained 1.33% in overnight trading as stock markets declined following official confirmation by scientists of variant B.1.1.529. The World Health Organisation has yet to outline its recommended next steps but some countries have already taken action, underlining just how worrying this new variant is. The UK has banned all flights from South Africa as of today (Friday) with other countries expected to follow suit.

The UK Health Security Agency says this new variant is the most complex and concerning of the pandemic so far. UK Secretary of State for Transport, Grant Schapps said, “The concern about this particular variant is that it is spreading very, very fast, its rate of growth has been very quick.”

Gold has surpassed all expectations during the pandemic with a months long bull run which saw it surging to record price levels last year. With the emergence of this new variant, the precious metal has already re-ignited that momentum, trading very close to the key resistance level of £1,349 ($1,800~) this morning. While gold prices are gaining quickly, stock markets are declining heavily. The Nikkei 225 was 2.53% lower overnight, with the ASX losing 1.73% and the FTSE 100 looks to be on course for its worst losses of the year so far and is down 3%.

IG’s Chief Market Analyst, Chris Beauchamp says that this could be the beginning of a difficult and uncertain period for the markets – an outlook that would put gold firmly back in the driving seat once more and reconfirm its undeniable attraction as a safe haven and solid store of wealth as the economy continues to be subjected to pandemic-related roadblocks. He said, “European markets have seen most of the gains made in the course of October and November evaporate overnight as investors around the globe react to the new Covid variant that has appeared in South Africa.

“Early reports suggest it spreads quickly and could be much more resistant to existing vaccines. While the situation appears confined to the region for now, markets are scrambling to price in return of restrictions across the globe, taking their cue from the UK’s travel restrictions and the tighter restrictions imposed in Portugal.”

As we have reported this month, the overwhelming expert consensus is that we are seeing the beginnings of a new era of gains for gold.

Buy now to benefit from the current price levels before we begin to see even greater highs on the horizon.

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