Gold extends gains amid softening dollar, rising geopolitical risks

WEB DESK: Gold prices increased for the third straight session on Wednesday, reaching a one-week high as weaker US dollar and rising tensions between Russia and Ukraine bolstered demand for safe-haven assets.

Spot gold rose 0.32 per cent to $2,640.19 per ounce, its highest level since last week. US gold futures also gained 0.5 per cent, trading at $2,643.70 per ounce.

The dollar which had recently surged to a one-year high, paused its rally, making gold more attractive to investors holding other currencies.

Tensions in Eastern Europe intensified after Russian President Vladimir Putin lowered the threshold for nuclear strikes responding to reports that US had allowed Ukraine to use American-made weapons in attacks deep into Russian territory.

Meanwhile, investors are looking ahead to comments from several Federal Reserve officials this week for clues on the potential path of US interest rates.

Markets currently see a 58.9 per cent chance of a 25-basis-point rate cut in December. However, robust economic data and proposed tariffs by President-elect Donald Trump suggest that interest rates may stay elevated longer than previously expected.

Spivak noted that rising inflation concerns could temper expectations for further rate cuts next year, which might weigh on gold. Higher interest rates tend to diminish the appeal of non-yielding assets like gold.

Kansas City Fed President Jeffrey Schmid stated that while the central bank’s initial rate cuts signal confidence in inflation returning to its 2 per cent target, uncertainty remains over how far rates can eventually drop.

In other precious metals, spot silver held steady at $31.22 per ounce. Platinum edged up 0.1 per cent to $975.10 and palladium remained unchanged at $1,035.43.

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