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Gold prices continued their upward trajectory in Asian trade on Thursday, marking a fourth consecutive session of gains as escalating tensions between Russia and Ukraine spurred safe-haven demand. However, the precious metal’s recovery faced headwinds from a robust U.S. dollar and uncertainty surrounding Federal Reserve rate decisions.
Spot gold rose 0.2% to $2,656.84 an ounce, while December gold futures climbed 0.3% to $2,659.15 an ounce by 05:00 GMT. This marks a rebound from recent two-month lows, driven largely by geopolitical concerns.
The conflict between Russia and Ukraine has intensified following the U.S. decision to authorize long-range missile support for Kyiv. Moscow’s response included lowering the threshold for nuclear retaliation, while Ukraine launched significant missile strikes on Russian territory using Western-supplied weapons. The heightened risk of escalation has drawn investors toward gold as a safe haven, bolstering its appeal in times of geopolitical instability.
However, the rally has been tempered by the dollar, which hovers near a one-year high. Expectations of higher long-term U.S. interest rates following Donald Trump’s election victory have kept the greenback resilient. Sticky inflation data and a cautious tone from the Federal Reserve have further curbed market bets on imminent rate cuts. Traders now estimate a 57.3% probability of a 25-basis-point rate cut in December, down from 85.7% a week ago, according to CME Fedwatch, with the likelihood of rates remaining unchanged rising to 42.7%.
The strength of the dollar and rising Treasury yields pose challenges to gold, as higher rates increase the opportunity cost of holding non-yielding assets like bullion.
Other precious metals also showed gains on Thursday but remain under pressure from recent losses. Platinum futures rose 0.4% to $970.35 an ounce, while silver futures added 0.7% to $31.225 an ounce. Industrial metals presented a mixed performance, with benchmark copper futures on the London Metal Exchange inching up 0.2% to $9,109.50 a ton, while December copper futures fell 0.2% to $4.1442 a pound. Copper prices have been undercut by concerns over slowing Chinese demand, with recent stimulus measures failing to meet market expectations.
While gold’s appeal remains supported by geopolitical uncertainty, its gains may be limited in the short term by the dollar’s strength and evolving monetary policy expectations. Investors will closely monitor further developments in the Russia-Ukraine conflict and upcoming U.S. economic data for additional market cues.
