Gold prices saw an uptick on Friday, supported by a weaker U.S. dollar and rising geopolitical tensions. However, the precious metal remains on track for its steepest monthly decline in more than a year, following the U.S. election victory of former President Donald Trump.
As of 0742 GMT, spot gold rose by 0.8%, reaching $2,661.14 per ounce, while U.S. gold futures also gained 0.8%, settling at $2,660.80. The rally came amid escalating geopolitical risks, with the Israeli military reporting an airstrike on a Hezbollah facility in southern Lebanon on Thursday. This strike targeted a site used to store mid-range rockets, as tensions continued to mount in the region. Meanwhile, Russia launched its second major attack on Ukraine’s energy infrastructure this month, triggering widespread power outages across the country.
Brian Lan, managing director at Singapore-based dealer GoldSilver Central, noted that these rising geopolitical uncertainties have prompted investors to turn to gold as a safe haven. “Gold is traditionally seen as a reliable investment during times of economic and geopolitical instability,” Lan explained.
A slight dip in the dollar further boosted gold’s appeal. The U.S. dollar index (.DXY) fell by 0.4%, making gold more attractive to buyers holding other currencies.
Despite the gains on Friday, gold prices are on track for a weekly decline following a sharp sell-off earlier in the week. For the month, gold has dropped by approximately 3%, hitting a two-month low on November 14. The price dip was largely driven by the U.S. dollar’s rally following Trump’s election victory, with market expectations that his proposed tariff policies could drive inflation, potentially leading the Federal Reserve to slow its interest rate-easing cycle.
Economists have cautioned about the potential volatility ahead, particularly in 2025, as the Fed may adopt a more cautious stance on interest rate cuts. This could weigh heavily on gold prices, according to a note from BMI.
“Given the risks ahead, we expect significant volatility in the gold market as the U.S. Fed likely takes a more measured approach to interest rates,” BMI stated.
Looking ahead, key U.S. economic reports next week, including job openings, the ADP employment report, and the official employment report, are expected to offer insights into the Fed’s future policy direction.
In other metals, spot silver rose 1.3% to $30.66 per ounce, platinum gained 1% to $940.34, and palladium climbed 1.5% to $990.25.
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