Gold prices rose for the fourth consecutive session on Thursday, driven by safe-haven demand amid escalating tensions in the Russia-Ukraine conflict. At the same time, investors awaited remarks from U.S. Federal Reserve policymakers to further gauge the interest rate outlook.
In the UAE, gold rates rose significantly, with 24-carat gold gaining AED4.25 to AED321.75 and 22-carat gold rising AED3.75 to AED297.75. Meanwhile, 21-carat gold rose AED3.75 to AED288.25 and 18-carat gold gained AED3.25 to AED247.25.
Globally, spot gold rose 0.45 percent to $2,659.46 per ounce, as of 6:38 GMT, its highest since November 11, after falling to its worst week in more than three years last week. Gold prices gained 33 percent in the last year, reaching an all-time high of $2,790.15 in late October.
Meanwhile, U.S. gold futures gained 0.41 percent to $2,662.45.
Russia-Ukraine tensions
The escalation in the Russia-Ukraine war and fears of a broader regional conflict that involves increasing threats of nuclear weapons have supported the recent surge in gold prices. Ukraine fired a series of British cruise missiles into Russia on Wednesday, just a day after firing U.S. missiles.
This came after Russian President Vladimir Putin lowered the threshold for a nuclear strike in response to a broader range of conventional attacks, days after reports said Washington had allowed Ukraine to use U.S.-made weapons to strike deep into Russia.
On Sunday, Russia launched its largest air strike on Ukraine in almost three months, severely damaging the country’s power system. This led U.S. President Joe Biden to authorize for Ukraine the use of long-range American missiles against military targets inside Russia, which prompted some haven flows and benefited gold prices on Monday.
In addition, the U.S. vetoed a U.N. Security Council resolution calling for a ceasefire in Gaza, adding to ongoing geopolitical tensions in the Middle East.
Fed rate cut bets dip further
Geopolitical tensions, economic risks, and a low interest rate environment, all bolster gold’s appeal. In addition, the U.S. dollar index fell 0.11 percent to 106.57, making gold prices more appealing for other currency holders.
Investors will now await remarks from several Fed officials later in the day. Moreover, they will look out for initial U.S. jobless claims data, due at 13:30 GMT. Two Fed governors offered contrasting perspectives on U.S. monetary policy on Wednesday, with one raising concerns about stubborn inflation, while the other remaining optimistic about continued progress in reducing price pressures.
Markets now see a 52 percent chance of a 25-basis-point U.S. rate cut in December, down from 59.1 percent in the previous session, according to the CME FedWatch tool.
Lisa Cook, a member of the Federal Reserve Board of Governors, noted on Wednesday that the central bank might be forced into a pause on interest rate cuts if inflation progress slows down. In addition, Fed governor Michelle Bowman said that the progress on inflation appears to have stalled and that the U.S. central bank should pursue a cautious approach to monetary policy.
Meanwhile, Boston Fed president Susan Collins said that more interest rate cuts are needed, but policymakers should proceed carefully to avoid moving too quickly or too slowly.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.36 percent to 875.39 metric tons on Wednesday.
Other precious metals
The precious metals market witnessed positive movement on Thursday, in line with the rise in gold prices. Spot silver rose 1.06 percent to $31.19 while platinum gained 0.38 percent to $965.10 and palladium increased by 0.59 percent to $1,027.25. However, copper declined 0.12 percent to $4.14.
