Gold prices rose in Asian trade on Friday, buoyed by a softer U.S. dollar as traders continued to bet on a potential interest rate cut by the Federal Reserve in December. Increased geopolitical tensions, particularly in Eastern Europe and the Middle East, further fueled demand for the precious metal as a safe haven.
Spot gold climbed 0.9% to $2,660.69 an ounce, while gold futures for February delivery also rose by 0.9%, reaching $2,684.75 an ounce as of 23:40 ET (04:40 GMT). Despite some losses earlier in the week following the announcement of an Israel-Hezbollah ceasefire, gold prices trimmed their weekly declines, with escalating Russia-Ukraine tensions providing further upward momentum.
Geopolitical Uncertainty Drives Safe-Haven Demand
The surge in gold prices came as Russia launched its second major attack on Ukraine’s energy infrastructure this week, escalating tensions in the ongoing conflict. Moscow also issued a warning that it might target Kyiv with advanced ballistic missiles in retaliation for Ukraine’s use of Western-made long-range missiles.
This aggressive stance follows a recent shift in Russia’s nuclear policy, lowering its threshold for potential retaliation. The ongoing geopolitical uncertainty has prompted investors to seek refuge in assets like gold.
Meanwhile, in the Middle East, the fragile ceasefire between Israel and Hezbollah appeared to be unraveling, with both sides accusing each other of violating the truce. This breakdown of peace efforts has further stoked concerns in the region, contributing to the heightened demand for gold.
Dollar Weakens as Market Eyes December Rate Cut
Gold’s gains were also supported by a dip in the U.S. dollar, as markets continue to bet on a Federal Reserve interest rate cut in December. Although recent data showed resilience in U.S. inflation, investors are holding firm in their expectations that the Fed will begin easing rates in the coming months.
This sentiment persisted despite recent signs of economic strength, with inflation remaining well above the Fed’s 2% target and U.S. fiscal policies under President Trump expected to continue fueling inflationary pressures.
The dollar experienced a sharp decline this week, losing ground from the boost it received following Donald Trump’s election win earlier in November. The uncertain outlook for U.S. interest rates is keeping markets on edge, with a series of speeches by Federal Reserve officials, including Chair Jerome Powell, scheduled for next week ahead of the December rate decision.
Broader Commodity Markets Also Gain
The broader metals market also saw gains on Friday, tracking the weaker dollar. Platinum futures rose 1.1% to $947.35 an ounce, while silver futures increased 1.5% to $31.157 an ounce.
Among industrial metals, copper prices were on the rise as well. Benchmark copper futures on the London Metal Exchange climbed 0.7% to $9,061.50 a ton, while February copper futures rose 0.8% to $4.1640 a pound. Market participants are awaiting the release of China’s purchasing managers index on Saturday, which is expected to show signs of economic recovery following a series of stimulus measures rolled out by Beijing in recent months.
As geopolitical tensions continue to escalate and the outlook for U.S. monetary policy remains uncertain, precious metals like gold are poised to remain in high demand as a safe-haven asset in the coming weeks.
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