Despite the dip, gold remains a favorite safe haven amid geopolitical tensions. Conflicts in Eastern Europe and the Middle East, coupled with concerns about US trade policy under new President Donald Trump, continue to underpin its appeal in times of uncertainty.
Silver reflects gold’s decline during the dollar rally
Silver prices (XAG/USD) followed a similar path, trading at $31.72 after hitting an intraday low of $31.52. The metal’s bearish trajectory reflects the strengthening dollar and rising Treasury yields.
However, like gold, silver retains its appeal as a safe haven, supported by persistent geopolitical instability.
Geopolitical uncertainty and interest rate expectations determine market sentiment
The US dollar gained ground as expectations for a rate cut in December intensified, with analysts expecting a 25 basis point cut by the Federal Reserve. However, hawkish comments from Fed Chairman Jerome Powell indicate the central bank will proceed cautiously, keeping Treasury yields high.
On the geopolitical front, escalating tensions in Ukraine and the Middle East continue to cause volatility in global markets. While military activity in these regions increases uncertainty, it simultaneously supports demand for gold and silver as safe haven investments.
Looking ahead: interest rate cuts and CPI data
Central banks worldwide are also in the spotlight. The Bank of Canada is expected to cut rates, followed by possible cuts from the European Central Bank and Swiss National Bank later this week. These moves could strengthen non-yielding assets like gold.