Gold prices remained rangebound on Friday, trading within a narrow $8 range, after reaching their highest levels in a week in the previous session. Geopolitical tensions have fueled demand for safe-haven assets, putting gold on track for a small weekly gain.
As of 0622 GMT, spot gold was largely unchanged at $2,635.83 per ounce. The metal has gained approximately 0.6% this week, following a peak on Thursday that marked its highest price since December 18.
“We are in a holiday lull, so price action is somewhat subdued, with moves likely exaggerated by thin liquidity,” said Kyle Rodda, a financial market analyst at Capital.com.
Gold has surged nearly 28% year-to-date, reaching a record high of $2,790.15 on October 31. This surge was driven by significant rate cuts from the Federal Reserve and escalating geopolitical concerns. However, the momentum faltered as the dollar strengthened following Donald Trump’s presidential victory, coupled with the Fed’s indication that fewer rate cuts are expected in 2025.
“The Fed’s decision dampened market confidence regarding the number of rate cuts likely to come next year, which has acted as a headwind for gold,” Rodda explained.
Markets are preparing for potential policy shifts in 2025, including changes to tariffs, deregulation, and tax policy, as Trump returns to the White House in January. While gold is traditionally viewed as a hedge against geopolitical instability, rising interest rates diminish the appeal of non-yielding assets like gold.
In other developments, Israel conducted airstrikes on multiple Houthi targets in Yemen on Thursday, including Sanaa International Airport, which resulted in at least six fatalities, according to Houthi media. Meanwhile, Russian air defenses reportedly downed an Azerbaijan Airlines plane that crashed in Kazakhstan, Reuters sources confirmed on Thursday.
On the metals front, spot silver rose by 0.2% to $29.85 per ounce, palladium gained 0.2% to $936.88, and platinum remained steady at $924.73. All three metals were also on track for weekly gains.
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