Silke Mayr Gold prices jumped 1% on Friday, heading for their best weekly performance in 2023, as geopolitical concerns, including the escalation of the Russia-Ukraine war, and expectations of interest rate cuts from the U.S. Federal Reserve spurred demand for safe-haven assets.
As of 08:00 GMT, spot gold reached $2,696.76 per ounce, marking a weekly gain of over 5%—its most significant increase since early October. U.S. gold futures rose 0.9%, trading at $2,699.30.
Soni Kumari, commodity strategist at ANZ, noted that geopolitical tensions, such as Ukraine’s attacks on Russian infrastructure, coupled with dovish remarks from Federal Reserve officials, have contributed to the rise in gold prices.
On Friday, Ukraine’s military claimed responsibility for drone strikes targeting Russian oil refineries and other military sites.
Gold’s appeal has been further strengthened by ongoing economic uncertainties, geopolitical risks, and a low interest-rate environment. Additionally, the Chicago Federal Reserve President reiterated his support for further rate cuts and suggested slowing the pace of tightening.
Markets are now pricing in a 59.4% chance of a 25-basis-point rate cut during the Fed’s December meeting, according to the CME Fedwatch tool.
“If the Fed chooses to pause or skip the rate cut in December, gold prices could experience a pullback,” Kumari added.
Investors are closely watching U.S. economic data set for release next week, including consumer sentiment, GDP growth, and core PCE inflation reports, to gauge the likelihood of future rate cuts. Nicholas Frappell, global head of institutional markets at ABC Refinery, believes gold prices could target the range of $2,690 to $2,715 based on current trends.
Other precious metals also saw upward movement on Friday. Spot silver increased by 1.7% to $31.31 per ounce, platinum rose 0.9% to $969.35, and palladium gained 1.3% to $1,042.50, all on track for weekly gains.