Gold Prices Rise Amid Tensions and Dollar Weakness

Gold prices saw an increase in Asian trade on Tuesday, extending a recovery from two-month lows as the dollar fell from recent highs, and heightened tensions between Russia and Ukraine spurred safe haven demand.

Market Overview

The price of gold surged sharply from a two-month low, coinciding with a rally in risk-driven assets following Donald Trump's victory in the 2024 presidential election, which appears to be losing momentum.

• Current Prices:
  • Spot gold rose 0.4% to $2,622.59 per ounce.
  • December gold futures increased by 0.5% to $2,626.90 per ounce at 23:20 ET (04:20 GMT).
  • Spot prices jumped nearly 2% on Monday.

Safe Haven Demand Amid Russia-Ukraine Tensions

Media reports indicate that the U.S. has approved Ukraine's use of long-range missiles for deeper strikes into Russian territory. In response, Russia has issued warnings of serious repercussions if such attacks occur, continuing their missile strikes across Ukraine.

This escalation possibility has led to increased safe haven demand for gold.

Dollar and Treasury Yields Drop

Gold and other metals found support from a weakening dollar and Treasury yields, as market participants speculated that U.S. interest rates might decline soon. The dollar was pressured from recent one-year highs and the 10-year Treasury yield dropped after peaking at a five-month high last week.

Despite strong inflation data and mixed signals from the Federal Reserve, expectations for a December rate cut remain strong, with a 55.7% chance predicted for a cut of 25 basis points, and a 44.3% probability for rates remaining unchanged.

Other Precious Metals

Other precious metals saw positive movement on Tuesday:
– Platinum futures rose by 0.3% to $976.75 per ounce.
– Silver futures climbed 0.6% to $31.422 per ounce.

Industrial Metals

Copper prices recovered slightly following the dollar's weakness but continued to face significant losses over the past month due to ongoing concerns about slowing demand in China, its top importer.
– Benchmark copper futures on the London Metal Exchange rose 0.3% to $9,124.50 per ton.
– December copper futures advanced 0.5% to $4.1440 per pound.

The People's Bank of China is expected to announce its benchmark loan prime rate on Wednesday.