Investing.com — Gold prices rose Thursday as heightened tensions between Russia and Ukraine supported safe-haven demand, helping the precious metal withstand dollar strength.
Gold rose for a fourth straight session, extending its recovery from a two-month low. But the yellow metal’s pace of gains now appeared to be slowing under dollar pressure as traders questioned their expectations for lower US interest rates.
rose 0.7% to $2,670.06 per ounce, while the December expiration rose 0.8% to $2,671.90 per ounce at 4:55 PM ET (2155 GMT).
Tensions between Russia and Ukraine are supporting demand for gold
The yellow metal was buoyed by increased demand for safe havens in light of increased tensions between Russia and Ukraine after the US authorized Kyiv’s use of long-range missiles.
Russia had responded by lowering the threshold for nuclear retaliation and warned of a serious escalation of the conflict over the US action. Ukraine launched a series of missile attacks on Russian territories this week, using Western-made weapons.
Fears of an escalation of the conflict drove traders towards gold, allowing the yellow metal to recover after plummeting from record highs in the past two weeks.
Buying by the central bank to help gold reach a record next year
Goldman Sachs co-head of Global Commodities Research Samantha Dart predicted in a Bloomberg interview that gold prices could reach $2,000 by the end of 2025.
The continued appetite for precious metals among central banks is expected to continue amid persistent geopolitical risks.
Dollar, yield point limits gold recovery
Gold suffered steep losses over the past two weeks as risk appetite was initially boosted by Donald Trump winning the 2024 presidential election.
Trump’s victory also had traders betting on the prospect of higher long-term U.S. interest rates, which supported U.S. Treasury yields. The dollar traded just below a one-year high on Thursday.
In addition to the Trump effect, gold’s upside potential was also limited by expectations that the Fed would cut interest rates less. In recent days, Fed members have suggested a more cautious approach to rate cuts amid concerns about slowing inflation and higher neutral rates.
Chicago Federal Reserve President Austan Goolsbee said Thursday he sees lower interest rates on the horizon, though he warned the pace of cuts may have to slow because of uncertainty about where the rate-cutting cycle will ultimately end.
Traders saw expectations for a rate cut in December scaled back.
showed that traders estimate a 57.3% chance of a 25 basis point cut in December, compared to an 85.7% chance last week. Hold bets rose to 42.7%, up from 14.3% a week ago.
This idea put pressure on gold as higher interest rates increase the opportunity cost of investing in the yellow metal.
Other precious metals rose on Thursday, but also posted losses over the past two weeks. rose 0.3% to $968.65 per ounce, while the price fell 0.4% to $30.870 per ounce.
Among industrial metals, the benchmark on the London Metal Exchange fell 0.6% to $9,034.00 per tonne, while the benchmark fell 1.1% to $4.1108 per pound in December.
Copper prices were undermined by increased concerns about slowing Chinese demand, especially as recent stimulus measures and economic data from the country were disappointing.
(Ambar Warrick contributed to this article)
