Gold prices rose significantly during these moments of trading on Monday after a series of losses that lasted for six days, with the halt of the rise of the US dollar and the escalation of uncertainty regarding the Russian-Ukrainian conflict, which led to renewed demand for gold as a safe haven.
The spot gold price jumped by 2.07% to reach $2,614 per ounce at 19:18 Riyadh time, moving away from its lowest level in two months that it reached on Thursday.
Gold futures in the United States also rose by 1.9%, reaching $2,618.
Why are gold prices rising now?
“Part of the reason is because President Biden announced long-range missiles to Ukraine, allowing them to strike targets deeper inside Russian territory,” said Daniel Pavilonis, chief market strategist at RJO Futures. “I think that has raised safe-haven demand for gold.”
Gold is considered a safe investment during turbulent economic and political periods. Last week recorded its largest weekly decline in more than three years, after President-elect Trump’s tariff proposals were presented, which could lead to potential inflation that prompts the Federal Reserve to slow the pace of rate cuts.
That pushed the dollar index to its highest level in a year on Thursday. However, the dollar fell 0.2% on Monday after rising 1.6% last week. The weakness of the dollar makes gold more attractive to buyers who use other currencies.
Pavilonis added: “Whether the Fed cuts rates or not, I think gold technically looks like it is looking to get back to the $2,700 level.”
The US central bank is widely expected to cut rates for a third time in December, although recent data indicated slowing progress towards returning inflation to its 2% target. Seven Federal Reserve officials are scheduled to speak this week.
Higher interest rates, which make non-yielding assets such as gold less attractive, can put additional pressure on the precious metal.
In terms of other metals, the spot price of silver rose by 3% to reach $31.13 per ounce, platinum increased by 2.2% to reach $959.37, and palladium jumped by 4.4% to reach $992.34.
