Gold Prices Surge Amidst Geopolitical Tensions

Gold prices rallied to a one-week high on Tuesday, trading now at $2630.38, up +0.72%, driven by escalating geopolitical tensions between Russia and Ukraine. The Kremlin’s announcement of a revised nuclear doctrine, which views attacks from non-nuclear states backed by nuclear powers as joint attacks, sparked investor concerns. As a result, safe-haven assets like gold gained traction. The precious metal’s price peaked at $100 above the previous week’s two-month low of $2,537 per ounce. However, it later retreated slightly as the S&P 500 opened higher.

Global stock markets experienced a fifth day of decline in six sessions, with the MSCI World Index nearing its one-week low. Government bond prices rose, pushing long-term borrowing costs lower. Energy markets also saw significant movement. Crude oil prices climbed to new November highs, driven by rising winter demand in Europe. Natural gas futures surged to an 11-month high, reflecting concerns over supply disruptions.

Meanwhile, US defense stocks outperformed the broader market, with companies like Lockheed Martin, Raytheon, and Boeing gaining ground. The World Gold Council’s recent report highlighted the role of illicit gold trade in funding the Russian war in Ukraine and supporting extremist groups. This further underscored gold’s appeal as a safe-haven asset.

Silver prices also rallied, reaching a one-week high of $31.50 per ounce before retreating. The UK gold price surged to £2,087, while Euro gold nearly touched €2,500. It is worth noting that gold rebounded sharply on Monday after posting its biggest weekly drop since 2021, as traders weighed the outlook for Federal Reserve rate cuts, given Donald Trump’s return to the White House next year.

Spot gold had risen over 2% to $2,612.83 per ounce, recovering most of last week’s losses and on its way for the biggest intraday gain since August. US gold futures also gained 1.8% to $2,615.70 per ounce. Gold posted its steepest weekly drop in more than three years last week as Trump’s proposed tariffs are seen as potential drivers of inflation, which could prompt the Fed to slow its rate-cutting pace. About half of swaps traders expect there will probably be a Fed cut next month before Trump’s inauguration, which would benefit the non-yielding gold.

Gold technically looks like it wants to get back near that $2,700 level, according to senior market strategist Daniel Pavilonis. Gold has also been supported by a pause in the US dollar rally, with the dollar index rising to a one-year high on Thursday but retreated, making gold more affordable to investors. Goldman Sachs reiterated a forecast for prices to rally to $3,000 an ounce by the end of next year, with analysts advising investors to “go for gold.”