LONDON: Gold firmed near the $1,800 level on Monday as investors sought cover from the likely risks to the global economy posed by the Omicron coronavirus variant, amid expectations of a more tempered approach to the Federal Reserve’s interest rate hikes.

Spot gold rose 0.3% to $1,796.53 per ounce by 1019 GMT, while US gold futures advanced 0.7% to $1,797.50. While gold is once again hovering around $1,800 levels, it’s expected to remain volatile with the Omicron variant the key driver, Saxo Bank analyst Ole Hansen said.

“If the virus does lead to renewed worries about economic activities, central banks will obviously be caught in between a rock and a hard place because inflation is not going to come down... but growth will, and that leaves them in a very precarious situation.”

With new cases of the Omicron variant found in the Netherlands, Denmark and Australia, more countries imposed travel restrictions. But capping gold’s moves, the dollar edged higher - making gold more expensive for overseas buyers - and equities regained some composure after sinking last week on fears that the new variant could bring fresh curbs.

Gold also closely tracked the timeline the US Federal Reserve may approach to hike interest rates, which translate into higher opportunity cost of holding gold, a non-interest bearing asset. The Omicron variant was seen as possibly affecting when the Fed and other major central banks will raise rates.

“Gold is taking cue from interest rates expectations,” Hussein Sayed, chief market strategist at Exinity Group said.

“Now markets expect only two rate hikes for 2022, down from three. The shift in rate expectations is helping gold gain some ground, but the move is insignificant so far.”

Spot silver rose 0.7% to $23.30 per ounce. Platinum gained 1.4% to $966.99, and palladium climbed 2.2% to $1,787.04.