Gold prices jumped by 1% on Friday, marking their best weekly performance in a year. The rally stems from rising demand for safe-haven assets as the Russia-Ukraine conflict intensifies and investors anticipate potential U.S. interest rate cuts.
At 08:00 GMT, spot gold climbed to $2,696.76 per ounce, reflecting a weekly gain of over 5%. This marks the strongest rise since October 2023. U.S. gold futures also increased by 0.9%, reaching $2,699.30 per ounce.
Geopolitical Factors and Fed Policy Drive Gold’s Rise
Soni Kumari, a commodity strategist at ANZ, attributed gold’s surge to heightened geopolitical tensions and the Federal Reserve’s dovish signals. Recent Ukrainian drone strikes targeted Russian infrastructure, including oil refineries and radar stations, fueling safe-haven demand.
Gold’s appeal remains strong due to its reputation as a safe asset during geopolitical and economic uncertainties. A low-interest-rate environment also supports gold prices. On Thursday, the Chicago Fed President backed further rate cuts, signaling a slower pace of monetary tightening.
Markets now predict a 59.4% likelihood of a 25-basis-point rate cut in December, according to the CME FedWatch Tool. However, if the Fed pauses or skips a December cut, gold prices might face downward pressure, Kumari warned.
Upcoming Economic Data to Shape Gold’s Outlook
Next week, key U.S. economic data will influence gold prices. Reports on consumer sentiment, GDP growth, and core PCE inflation may provide insights into future rate cuts. Fed Governor Michelle Bowman’s comments will also be closely watched. Nicholas Frappell, global head of institutional markets at ABC Refinery, expects gold prices to range between $2,690 and $2,715 in the near term.
Other precious metals also recorded gains on Friday. Spot silver rose 1.7% to $31.31 per ounce, platinum gained 0.9% to $969.35, and palladium increased by 1.3% to $1,042.50. All three metals are on track for weekly increases.
