Gold prices rose on Wednesday, gaining more ground as safe-haven demand rose due to rising tensions over Russia and Ukraine, although resilience in the dollar capped overall gains.
The yellow metal rebounded sharply from two-month lows this week, benefiting from some relief from slight weakness in the dollar. But the dollar stabilized from recent losses on Wednesday, limiting gold’s gains.
Spot gold rose 0.2% to $2,636.28 an ounce, while gold futures expiring in December rose 0.3% to $2,639.50 an ounce.
Rising tensions between Russia and Ukraine were the biggest point of support for gold, as demand for safe havens increased after Moscow lowered the threshold for nuclear retaliation over the Ukrainian attacks.
The move was in response to the US reportedly authorizing the use of long-range missiles by Ukraine against Russia, which Moscow warned could represent a dangerous escalation in the conflict.
However, Russian Foreign Minister Sergei Lavrov said the country would do everything possible to avoid nuclear war. But hostilities with Ukraine have continued, with both countries launching debilitating attacks against each other over the past week.
But the strength of the dollar limited gold’s recovery this week, especially with the dollar stabilizing from three days of losses on Wednesday and the dollar remaining close to its highest level in one year recorded last week.
Markets remained uncertain about what a Donald Trump presidency might entail for the US economy and interest rates, amid some doubts about whether the Federal Reserve will cut interest rates in December.
CME Fedwatch data showed that traders expected the odds of a 25 basis point rate cut to be 61%, and interest rates to remain unchanged at 39%.
Gold fell from record highs after Trump won the election earlier in November although that trade now appears to be cooling.
