Gold Prices Edge Higher Amid South Korean Political Crisis and Middle Eastern Tensions

Gold prices saw marginal gains during Asian trading hours on Wednesday as political turmoil in South Korea and escalating tensions in the Middle East boosted safe-haven demand. However, the strength of the U.S. dollar, fueled by uncertainty over the Federal Reserve’s interest rate outlook, capped any significant upward momentum for the yellow metal.

Gold Prices Supported by Safe-Haven Demand

Spot gold inched up by 0.1% to $2,646.53 an ounce, while February gold futures rose to $2,668.60 an ounce. Renewed geopolitical concerns, including a potential collapse of the Israel-Hezbollah ceasefire, drove haven buying, though a robust U.S. dollar tempered gains.

South Korea’s Political Unrest Sparks Market Jitters

South Korea’s President Yoon Suk-Yeol briefly declared martial law on Tuesday, a move that faced swift opposition from Parliament and citizens, prompting its immediate rescission. The incident has plunged the country into its worst political crisis since the 1980s, with opposition parties calling for Yoon’s impeachment.

This instability in South Korea—a key economic player in East Asia—has heightened regional uncertainty, pushing investors towards safe assets like gold.

Middle Eastern Tensions Add to Haven Buying

Growing tensions in the Middle East further bolstered gold prices, as fears of escalating conflict between Israel and Hezbollah loom large. Israel recently warned Lebanon’s government of potential accountability for a breach in the U.S.-brokered truce, following mutual strikes over the past week.

Dollar Strength Weighs on Metal Markets

Despite increased safe-haven demand, a stronger U.S. dollar limited gold’s upside. The dollar surged amid uncertainty surrounding Federal Reserve policy, as traders await a key speech by Fed Chair Jerome Powell later in the day.

The Fed is widely expected to implement a 25-basis-point rate cut in December. However, persistently high inflation and fiscal policies under the incoming Trump administration have clouded the long-term outlook for U.S. interest rates.

Muted Performance in Broader Metal Markets

• Platinum and Silver: Prices showed little movement on Wednesday.
• Copper: Benchmark copper futures on the London Metal Exchange fell 0.3% to $9,096.0 per ton, while February copper futures dipped 0.2% to $4.1895 per pound.

Broader metal markets remain under pressure as traders await Powell’s remarks for clarity on future monetary policy.

While gold prices may continue to find support from geopolitical tensions and safe-haven demand, their performance will remain heavily influenced by movements in the U.S. dollar and Federal Reserve signals in the coming weeks.