NEW YORK: Gold prices rose on Tuesday, as demand for the safe-haven metal asset was lifted by a surge in COVID-19 cases of the Omicron variant that threatened global economic recovery.

Spot gold was last up 0.7% at $1,814.13 per ounce by 12:42 P.M. ET (1742 GMT), having marked its worst session in more than a month on Monday. US gold futures were up 0.8% at $1,814.70.

The year started off with fresh record highs for equities, but since it is hard to determine whether this winning streak will continue, investors have started to go back into safety, said Ed Moya, senior market analyst at brokerage OANDA.

“The impact of Omicron is going to be mostly felt on the inflationary side and on economic recovery,” Moya added.

Several countries have imposed fresh restrictions to tackle a surge in cases driven by the new variant.

Concerns surrounding the Omicron variant have sparked a safe-haven bid in gold, TD Securities wrote in a note, adding that, “higher gold prices are inconsistent with global markets pricing in a 70% probability for a Fed rate hike in March, which places a cap on prices.”

Gold, which offers no yield of its own, tends to fall out of favour with investors when interest rates rise.

Renewed inflation concerns could hit the marketplace in the near term and sap risk appetite as bond yields are likely to continue to rise, Jim Wyckoff, a senior analyst at Kitco Metals, said in a note.

A rise in US treasury yields on expectations for a Fed rate hike this year lifted the dollar to five-year high versus the yen.

Silver rose 0.7% to $23.01 per ounce, platinum was up 1.5% at $969.45, and palladium climbed 2.4% to $1,869.23.