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Gold prices experienced an uptick on Friday, buoyed by a declining dollar as market participants anticipated a potential interest rate cut in December. Additionally, the ongoing geopolitical tensions have further elevated the demand for safe-haven assets.
This week, gold faced some pressure following the announcement of a ceasefire between Israel and Hezbollah. However, as tensions escalated once more between Russia and Ukraine, gold prices regained some ground on Thursday and Friday.
The price of gold advanced by 0.6% to $2,659.14 per ounce, while February futures increased by 0.7% to $2,683.79 per ounce as of 1:24 PM ET (1824 GMT).
Russia-Ukraine tensions stoke safe haven demand
This week marked a significant escalation in the conflict in Ukraine, as Russia conducted its second major strike targeting Ukraine’s energy infrastructure. The Kremlin has also issued threats of advanced ballistic missile attacks on Kyiv.
These aggressive actions were framed as a response to Ukraine’s deployment of Western-supplied long-range missiles against Russian territory, with Moscow warning that such developments could lead to a severe escalation in hostilities.
Earlier in November, Russia indicated a lowered threshold for nuclear retaliation, further intensifying fears about the potential for a wider conflict.
Meanwhile, the tenuous ceasefire between Israel and Hezbollah has been called into question, with both parties accusing each other of violating the truce.
Softer dollar buoys gold as markets bet on December rate cut
The rise in gold prices has been aided by a weakening dollar, as traders hold onto the belief that the Federal Reserve is likely to lower interest rates in December.
Current market forecasts indicate a 68.6% probability of the Fed implementing a 25 basis point cut, with a 31.4% chance that the rates will remain unchanged. This outlook persists despite recent data showcasing stubborn inflation levels in the U.S. Federal Reserve officials continue to suggest a gradual approach to rate adjustments.
This week, the dollar depreciated significantly, reversing some gains it had made following Donald Trump’s recent electoral victory.
Nevertheless, the broader perspective on U.S. interest rates remains uncertain, with inflation levels still exceeding the Fed’s target of 2%. Analysts also anticipate that Trump’s expansionary policies could contribute to sustained inflationary pressures, complicating the interest rate landscape.
Several Federal Reserve officials, including notable figures, are scheduled to deliver addresses next week in advance of the December rate decision.
In related market activity, broader metal prices climbed on Friday alongside the weaker dollar. Silver saw a 2.5% increase, reaching $954.80 per ounce, while platinum rose by 1.8% to $31.102 per ounce.
Among the industrial metals, benchmark aluminum prices on the London Metal Exchange experienced a 0.3% uptick, settling at $9,020.50 per ton, while copper prices remained steady at $4.1427 per pound.
Traders in the copper market are closely monitoring upcoming data from China, the largest importer of the metal, which is expected to be released on Saturday. This report is anticipated to reflect an increase in economic activity following significant stimulus measures implemented by Beijing over the past two months.
Source
www.investing.com