Gold prices saw a modest increase in Asian trade on Monday, driven by growing geopolitical instability in Syria and South Korea, which prompted some safe-haven demand. However, the precious metal’s gains were constrained by a strengthening U.S. dollar, which limited the upside potential.
In recent weeks, gold’s performance has been subdued, with rising geopolitical tensions offset by concerns over U.S. interest rates. As traders continued to favor the dollar and U.S. Treasuries, gold struggled to maintain momentum.
By 23:17 ET (04:17 GMT), spot gold had climbed 0.2% to $2,638.77 an ounce, while February gold futures held steady at $2,660.41 an ounce.
Geopolitical Turmoil Drives Safe-Haven Demand
The primary factor behind the slight uptick in gold prices was the surge in safe-haven demand, triggered by escalating turmoil in both Syria and South Korea.
In Syria, rebel forces captured the capital city of Damascus and ousted President Bashar al-Assad, who fled to Russia. The political upheaval raised concerns about the potential implications of regime change following a prolonged civil war. The rebel forces, partially supported by Turkey and aligned with the Sunni Islamic sect, are in conflict with Iran. Further complicating matters, Israel reportedly entered Syrian territory, escalating tensions in the region.
In South Korea, a deepening leadership crisis added to the geopolitical uncertainty. Over the weekend, prosecutors named President Yoon Suk Yeol in a criminal investigation following his failed attempt to impose martial law. While Yoon survived an impeachment vote, the leader of his party suggested that he would eventually be forced to step down.
These two geopolitical developments helped drive demand for gold as investors sought safer assets amid rising global uncertainty.
Dollar Resilience Caps Gold’s Gains
Despite the uptick in gold, the metal’s price gains were capped by the ongoing strength of the U.S. dollar, which was supported by anticipation of key inflation data set for release later this week. Markets remain largely positioned for a 25-basis-point interest rate cut by the Federal Reserve in its upcoming meeting. However, uncertainty surrounding the central bank’s long-term outlook on rates persists, with inflationary pressures and resilient economic data suggesting a slower pace of rate cuts in 2025.
Other Precious Metals Show Weakness
Elsewhere in the precious metals market, most other metals showed signs of weakness. Platinum futures remained stable, edging up slightly to $935.75 an ounce, while silver futures fell by 0.5%, settling at $31.442 an ounce.
Copper Prices Weaken Amid China’s Economic Strain
In the industrial metals sector, copper prices experienced a retreat following disappointing Chinese inflation data, which indicated ongoing economic strain in the world’s top copper importer.
Benchmark copper futures on the London Metal Exchange declined by 0.2% to $9,082.00 per ton, while February copper futures fell 0.3% to $4.1858 per pound. Chinese consumer inflation shrank more than expected in November, while producer inflation continued to decline for the 25th consecutive month, signaling limited improvements in China’s economic conditions despite recent stimulus efforts by Beijing.
Conclusion
Gold’s modest gains were driven by rising geopolitical tensions in Syria and South Korea, although its rally was restrained by a stronger dollar and ongoing uncertainties surrounding U.S. interest rates. Meanwhile, other precious metals struggled, and industrial metals such as copper were affected by economic concerns in China.
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