According to data from the Kitco exchange, the spot gold price in New York closed up $13.5/oz from the previous session’s close, settling at $2,649.1/oz.
“Escalating geopolitical tensions once again prompted investors to flock to gold in hopes of profiting from rising prices,” said Brian Lan, a director at Singapore-based brokerage GoldSilver Central.
Israeli air forces on Thursday struck a medium-range missile depot belonging to Hezbollah in southern Lebanon. The attack came a day after both sides accused each other of violating a ceasefire that ended over a year of fighting. Meanwhile, Russia also launched its second major attack this month on Ukraine’s energy infrastructure, causing widespread power outages in the country.
Gold is often seen as a safe haven investment during periods of economic and geopolitical uncertainty, such as traditional or trade wars.
“The slight weakness in the US dollar also provided some support for gold prices,” Lan said.
The Dollar Index, which measures the greenback’s strength against a basket of six major currencies, fell 0.2% on Thursday to close at 105.78, its lowest level in more than two weeks, according to data from Marketwatch. However, the index gained 1.44% in November as markets anticipated that Trump’s victory would boost fiscal spending, higher tariffs, and tighter immigration policies.
Despite Friday’s price increase, gold prices fell 2.14% this week following a sharp sell-off earlier in the week. For the month, the precious metal declined by 4.58% as the US dollar strengthened after Donald Trump’s presidential win. This was gold’s biggest monthly decline since September 2023. However, year-to-date, gold prices are still up over 30%.
Gold, which has been strongly supported by geopolitical tensions and Fed rate cuts this year, now faces pressure as the US administration prepares for a transition. According to economists, Trump’s tariff plans could lead to a resurgence of inflation in the US and slow down the Fed’s monetary policy easing cycle.
“We see downside risks and expect gold prices to fluctuate significantly in 2025 as the Fed may become more cautious about rate cuts, a move that would be detrimental to gold,” BMI said in a recent report.
Economic data to be released next week, including the ADP employment report and the non-farm payrolls report, will provide important insights into the Fed’s policy outlook.
However, many analysts remain optimistic about gold’s prospects, despite expecting significant volatility.
“It is still uncertain to what extent Trump’s tariff statements will be realized,” said Jim Wyckoff, senior market analyst at Kitco Metals. “However, tariffs could also act as a hurdle for slowing economic growth, and if this happens, the gold market will benefit as it is a safe-haven asset.”
“A host of uncertainties are still lingering globally. This will continue to drive demand for gold as a safe-haven asset,” said Ole Hansen, head of commodity strategy at Saxo Bank, in a report.
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