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Gold prices climbed higher on Wednesday, bolstered by increasing safe haven demand as geopolitical tensions between Russia and Ukraine escalated. However, gains in the precious metal were somewhat restrained due to the persistent strength of the U.S. dollar.
Spot gold edged up by 0.2% to $2,636.28 an ounce, while December gold futures saw a 0.3% rise to $2,639.50 an ounce by 23:35 ET (04:35 GMT).
Russia-Ukraine Conflict Spurs Safe Haven Demand
The ongoing conflict between Russia and Ukraine remains a critical driver for gold prices. Tensions escalated after Russia announced a lower threshold for nuclear retaliation in response to Ukraine’s use of U.S.-authorized long-range missiles. Moscow’s latest warning adds to fears of a severe escalation in the conflict.
Despite the threat, Russian Foreign Minister Sergei Lavrov emphasized that Russia aims to avoid nuclear war, though skirmishes between Russian and Ukrainian forces continue unabated. This geopolitical uncertainty has heightened safe haven demand, giving gold prices a boost.
Dollar Strength Caps Gold’s Recovery
While gold found support from geopolitical concerns, a resilient dollar continued to limit its upward momentum. The dollar steadied on Wednesday after three consecutive days of losses and hovered near a one-year high set last week. Uncertainty surrounding the economic impact of a Donald Trump presidency and potential Federal Reserve actions kept the greenback in focus.
Traders are pricing in a 61% probability of a 25 basis point rate cut by the Federal Reserve in December, with a 39% chance that rates will remain unchanged, according to CME Fedwatch data. The anticipation of interest rate cuts, coupled with uncertainty over Trump’s inflationary policies, has created a complex backdrop for gold traders.
Gold prices have fallen from record highs in the wake of Trump’s electoral victory earlier in November, though the downward trend appears to be stabilizing as geopolitical risks come to the fore.
Other Precious and Industrial Metals
The rally in other precious metals paused on Wednesday. Platinum futures held steady at $979.25 an ounce, and silver futures remained unchanged at $31.260 an ounce.
Industrial metals also exhibited mixed performance. Benchmark copper futures on the London Metal Exchange rose by 0.3% to $9,150.50 a ton, while December copper futures inched up 0.1% to $4.1713 a pound. Copper prices have been under pressure recently due to disappointing stimulus measures from China, the world’s top copper importer. On Wednesday, China’s decision to keep its benchmark loan prime rate unchanged provided little optimism for the red metal.
