Gold Prices Rise as Dollar Weakens and Geopolitical Tensions Intensify

Gold prices saw gains in Asian trade on Tuesday, building on a recovery from two-month lows. The yellow metal benefitted from a pullback in the U.S. dollar and escalating geopolitical tensions between Russia and Ukraine, which fueled demand for safe-haven assets.

Spot and Futures Prices Climb

Spot gold was up 0.4% to $2,622.59 an ounce, while gold futures for December delivery increased by 0.5% to $2,626.90 an ounce as of 23:20 ET (04:20 GMT). This comes after a nearly 2% rise on Monday, driven by a retreat in risk assets following the recent U.S. presidential election outcome.

Safe-Haven Demand Amid Russia-Ukraine Conflict

Geopolitical tensions provided a tailwind for gold. Reports surfaced that the U.S. had granted Ukraine permission to use long-range missiles against targets within Russia. Moscow issued warnings of serious consequences should such attacks occur, as missile strikes from Russia continued across Ukraine. The prospect of further escalation in the conflict has increased demand for gold as a safe-haven investment.

Dollar and Treasury Yields Retreat

In addition to geopolitical concerns, gold gained support from a weaker U.S. dollar and declining Treasury yields. The dollar slipped from recent highs, while the 10-year Treasury yield fell after reaching a five-month peak last week. The retreat came even as inflation data remained robust and Federal Reserve officials gave less dovish signals.

Market expectations for a December rate cut remain significant. According to CME FedWatch, there is a 55.7% probability of a 25 basis point rate cut in December and a 44.3% chance that rates will be held steady. The possibility of lower rates supports gold by reducing the opportunity cost of holding non-yielding assets.

Other Precious and Industrial Metals See Gains

• Platinum: Futures rose 0.3% to $976.75 an ounce.
• Silver: Futures gained 0.6% to $31.422 an ounce.
• Copper: Industrial metals, including copper, also experienced some relief. Benchmark copper futures on the London Metal Exchange increased by 0.3% to $9,124.50 a ton, while December copper futures rose 0.5% to $4.1440 a pound. Despite this uptick, copper remains under pressure due to persistent concerns about slowing demand in China.

Investors are eyeing the People’s Bank of China’s upcoming decision on the loan prime rate, which is expected on Wednesday, for further indications of economic trends in the world’s largest copper importer.