Gold prices reversed course to approach a one-week peak on Monday, as renewed risks to global economic growth from rising omicron cases overshadowed pressure from a stronger US dollar.

Spot gold rebounded from an earlier slump and rose 0.5% to $1,811.81 per ounce by 11:40 a.m. ET. US gold futures stayed relatively flat at $1,813.10 per ounce in New York.

Meanwhile, the dollar index rose from its weakest level in nearly a week, which makes the greenback-priced gold less attractive for holders of non-US currencies.

Still, the outlook for gold in the first quarter of 2022 is upbeat, with the main driver being inflation, which is keeping a floor under prices, Jim Wyckoff, a senior analyst at Kitco Metals, told Reuters.

“The underlying support comes from inflation concerns,” Wyckoff said, adding “the leanings of the Fed for a little bit tighter monetary policy seems to have assuaged the gold traders a little bit.”

“While there is a firmer US dollar, there isn’t a lot of movement in gold today,” said Quantitative Commodity Research analyst Peter Fertig, adding that one of the main reasons for the lack of liquidity is closed markets over Christmas.

“Slightly higher yields increase the opportunity cost for holding gold, which is weighing a little on gold prices,” Fertig added.

“Although quiet overall this week, the low liquidity makes headline sensitivity more pronounced, as the thin markets are likely to make for more jittery price action if something were to happen,” said DailyFX currency strategist Ilya Spivak