Gold Prices Rise on Weaker Dollar and Geopolitical Tensions
Gold prices surged on Friday, driven by a weaker dollar and increased geopolitical tensions. Despite earlier losses, the metal trimmed its weekly losses on Thursday and Friday, as investors sought safe-haven assets.
The price of gold rose 0.6% to $2,651.39 an ounce, while the expiring February contract rose 0.5% to $2,675.21 an ounce. The rally was fueled by a softer dollar, as markets continued to bet on a December interest rate cut by the Federal Reserve.
Tensions between Russia and Ukraine also contributed to the rally, as investors sought safe-haven assets. Russia launched its second major strike on Ukraine’s energy infrastructure this week, and threatened to attack areas in Kyiv with advanced ballistic missiles. The situation remains uncertain, with Russia and Ukraine accusing each other of violating a recent ceasefire.
The dollar’s drop has been persistent, with markets maintaining expectations that the Federal Reserve will cut interest rates in December. Traders are betting on a 68.6% chance of a 25-basis-point rate cut and a 31.4% chance of rates remaining unchanged, according to recent data.
The long-term outlook for U.S. interest rates remains uncertain, as inflation remains above the Fed’s 2% target. Expansionary policies under President Donald Trump are also expected to underpin inflation and interest rates. Several Fed officials are set to give addresses next week before the December rate decision.
Broader metal prices also rose, with silver rising 1.3% to $944.05 an ounce, and palladium rising 1.7% to $31.067 an ounce. Copper prices also rose, with the London Metal Exchange benchmark increasing 0.2% to $9,010 a ton. The market is awaiting data from top importer China, which is expected to show a pick-up in activity following recent stimulus measures.
