Gold prices rise as dollar weakens and tensions escalate in Ukraine

The price of gold rose for the fourth consecutive day as the US dollar weakened and increasing tensions in Ukraine heightened demand for safe-haven assets.

On Friday, bullion surged as much as 1.1%, trading close to $2,666 per ounce, following Russian President Vladimir Putin’s warning that his forces might target “decision-making centers” in Kyiv with ballistic missiles. Concurrently, the dollar dipped against major currencies, with the dollar index poised for its first weekly decline in two months, making gold more affordable for many investors.

Despite this rise, bullion remains down approximately 2% for the week due to indications of easing tensions in the Middle East, with a US-mediated cease-fire between Israel and Hezbollah set to commence on November 27.

So far this year, gold has gained nearly 30%, bolstered by the US Federal Reserve’s monetary easing, central bank acquisitions, and increased geopolitical and economic uncertainties. Some analysts anticipate new highs in 2025, with both Goldman Sachs Group and UBS Group AG releasing optimistic forecasts this month.

As of 10:24 a.m. in London, spot gold rose 0.9% to $2,662.52 per ounce. The Bloomberg Dollar Spot Index fell by 0.2% and has decreased by 1.1% this week. Other precious metals, including silver, platinum, and palladium, also saw gains.

Swaps markets are now assigning a two-thirds probability that the Fed will lower borrowing costs again next month, a significant increase from roughly even odds earlier this week. Typically, lower borrowing costs are advantageous for gold, which yields no interest.

© 2024 Bloomberg

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