Gold prices surged on Monday, reversing six consecutive days of losses, as the U.S. dollar’s recent rally stalled and growing tensions over the Russia-Ukraine conflict reignited demand for safe-haven assets.
Spot gold rose by 1.8%, reaching $2,608.19 per ounce by 01:44 p.m. ET (1844 GMT), recovering from a two-month low hit last Thursday. U.S. gold futures settled 1.7% higher at $2,614.60.
The uptick in gold prices followed recent developments in the conflict, particularly U.S. President Joe Biden’s announcement of long-range missiles for Ukraine, which would enable strikes deeper into Russian territory. As geopolitical uncertainties escalate, investors sought refuge in gold, which is traditionally seen as a stable store of value during times of crisis.
Gold had experienced its largest weekly drop in over three years last week, pressured by expectations of higher inflation and a stronger dollar. Speculation surrounding President-elect Donald Trump’s proposed tariffs added to inflationary concerns, which, in turn, could prompt the Federal Reserve to slow its rate-cutting trajectory. This led the dollar index to climb to a one-year high on Thursday.
However, the greenback retreated by 0.4% on Monday, following a 1.6% gain last week. A weaker dollar makes gold more attractive for international buyers, as it becomes less expensive when priced in other currencies.
Market participants are closely watching the Federal Reserve’s next moves. The central bank is expected to announce a third interest rate cut in December, though recent data suggests that progress in reducing inflation toward its 2% target has stalled. Seven Fed officials are scheduled to speak this week, offering further insight into the central bank’s future policy stance.
While higher interest rates tend to weigh on non-yielding assets like gold, the ongoing economic and geopolitical risks continue to support gold prices.
In other precious metals, spot silver increased 2.8% to $31.05 per ounce, platinum rose 2.8% to $964.87, and palladium gained 5.3%, climbing to $1,001.29 per ounce.
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