Gold prices climbed 1% on Friday, positioning the metal for its best week in 2023, as escalating geopolitical tensions and expectations of U.S. interest rate cuts fueled demand for safe-haven assets.
Spot gold traded at $2,696.76 per ounce by 08:00 GMT, up more than 5% for the week—its strongest weekly performance since early October. U.S. gold futures also rose by 0.9%, reaching $2,699.30.
According to Soni Kumari, a commodity strategist at ANZ, geopolitical developments, including Ukraine’s recent strikes on Russian infrastructure, along with dovish remarks from Federal Reserve officials, have provided strong support for gold prices.
On Friday, Ukraine’s military reported a successful attack on Russian oil refineries and other military targets using drones.
The appeal of gold as a safe-haven asset has been amplified by ongoing geopolitical uncertainty, economic risks, and a low interest-rate environment. The Chicago Federal Reserve President reiterated on Thursday his support for further rate cuts and suggested the pace of tightening may slow.
Market participants are currently pricing in a 59.4% probability of a 25-basis-point rate cut during the Fed’s December meeting, according to the CME Fedwatch tool.
“If the Fed delays or halts rate cuts in December, we may see a pullback in gold prices,” Kumari cautioned.
Investors will be closely monitoring next week’s critical U.S. economic data, including consumer sentiment, GDP figures, and core PCE inflation reports, to gauge the outlook for future rate cuts. Nicholas Frappell, global head of institutional markets at ABC Refinery, forecasts that gold prices will target the $2,690-$2,715 range based on recent trends.
Meanwhile, other precious metals saw gains as well. Spot silver rose 1.7% to $31.31 per ounce, platinum increased by 0.9% to $969.35, and palladium rose 1.3% to $1,042.50, all on track for a strong weekly performance.