Jan. 4 (Reuters) – Gold prices rose on Tuesday as demand for the safe haven metal was boosted by concerns over an increase in Omicron variant COVID-19 cases that could threaten the global economic recovery.

Spot gold last rose 0.8% to 1,814.45 an ounce at 1:54 p.m. ET (1854 GMT). US gold futures were up 0.8% to $ 1,814.60.

The year has started with new records for stocks, but as it is unclear whether this winning streak will continue, investors have started to take refuge, said Ed Moya, senior market analyst at OANDA.

“Omicron’s impact will be felt mainly on the inflationary side and on the economic recovery,” Moya added.

Wall Street slashed gains after a bullish start to the year as investors reduced risk-taking after data showed U.S. manufacturing slowed last month and COVID-19 concerns persisted.

Several countries have imposed new restrictions to cope with an increase in cases caused by the new variant.

Concerns over the Omicron variant triggered a safe haven offer for gold, TD Securities wrote in a note, adding that “higher gold prices are inconsistent with world market prices in a 70% probability of d ‘a Fed rate hike in March, which places a price cap. “

Gold, which itself offers no return, tends to fall out of favor with investors when interest rates rise.

New inflation concerns could hit the market in the near term and undermine risk appetite as bond yields are expected to continue to rise, Jim Wyckoff, senior analyst at Kitco Metals, said in a note.

Gold’s gains came despite higher U.S. Treasury yields and a stronger dollar, with federal funds futures traders forecasting three rate hikes by the Federal Reserve by the end of 2022.

Silver rose 0.7% to $ 23.02 an ounce, platinum rose 1.7% to $ 970.73 and palladium climbed 2.2% to $ 1,865.27.

Report by Kavya Guduru in Bangalore; Additional reporting by Ashitha Shivaprasad; Editing by Devika Syamnath and Amy Caren Daniel

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