Gold prices were set for their best week in a year on Friday as safe-haven demand grew amid rising tensions between Russia and Ukraine. Meanwhile, investors awaited key data and Federal Reserve officials’ comments for more insight into the U.S. interest rate cut trajectory.
In the UAE, gold rates continued to rise, with 24-carat gold and 22-carat gold gaining AED2.75 to AED325.50 and AED301.50, respectively. Meanwhile, 21-carat gold rose AED2.5 to AED291.75 and 18-carat gold gained AED2 to AED250.
Globally, spot gold rose 0.58 percent to $2,688.35 per ounce, as of 6:07 GMT. Bullion is up nearly 5 percent so far this week, its best week since early October 2023. Gold prices gained 34 percent in the last year, reaching an all-time high of $2,790.15 in late October.
Meanwhile, U.S. gold futures gained 0.57 percent to $2,690.10.
Russia-Ukraine tensions escalate
Gold prices are currently drawing support from the escalating tensions between Russia and Ukraine and the risk of further conflict. On Thursday, Russia launched a hypersonic missile at Dnipro after the U.S. and U.K. approved Kyiv’s use of advanced Western weapons to strike Russian territory.
Earlier this week, 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.
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.
Geopolitical tensions, economic risks, and a low interest rate environment bolster the appeal of gold for investors.
Gold prices defy rising dollar
In addition, the U.S. dollar picked up again, rising to almost a 13-month high after gaining 0.17 percent to 107.14, which makes gold more expensive for other currency holders. The dollar has rallied around 3 percent so far this month on expectations that U.S. president-elect Donald Trump’s policies could fuel inflation and limit the Fed’s ability to cut rates.
The euro, which makes up a considerable portion of the dollar index, steadied at $1.0475 after falling to a 13-month low of $1.0461 on Thursday.
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Fed rate cut prospects
Chicago Federal Reserve president Austan Goolsbee reiterated his support for further U.S. interest rate cuts and his openness to slowing them down on Thursday. Meanwhile, New York Fed president John Williams said that the disinflationary process continues and added that the Fed funds rate will be lower by the end of 2025.
On the data front, last week’s U.S. initial jobless claims hinted that the labor market remains strong, suggesting the Federal Reserve could achieve a soft landing. Investors will now await the release of the U.S. consumer sentiment data due at 03:00 GMT, along with Fed governor Michelle Bowman’s remarks, for further hints on the rate cut outlook.
Gold’s near-term movement could also be influenced by next week’s key U.S. data releases, such as the preliminary GDP and core PCE, with prices expected to target $2,690-$2,715 based on recent trends, said analysts.
Markets are pricing in a 55.9 percent chance of a 25-basis-points cut at the Fed’s December meeting, according to the CME Fedwatch tool.
Other precious metals
The precious metals market witnessed mixed movement on Friday as gold prices continued to rise. Spot silver rose 0.02 percent to $30.79 while platinum fell 0.47 percent to $956.27. However, palladium increased by 0.30 percent to $1,032.47.
