At 12:22 GMT, XAU/USD is trading $2699.47, up $29.82 or +1.12%.
Demand for safe havens is driving the gold rally
Gold is on track for its best week in more than a year, rising 5% amid escalating geopolitical tensions between Russia and Ukraine. Spot gold reached its highest level since early November, while US gold futures followed suit. This rally continues despite the US dollar hitting a 13-month high, underscoring robust demand for safe havens.
Geopolitical uncertainty has been a major catalyst, with Ukraine reporting attacks on key Russian infrastructure. Analysts including UBS’s Giovanni Staunovo note that both gold and the dollar have attracted safe-haven flows, an unusual simultaneous rally. Bitcoin’s approach to the $100,000 mark further highlights investors’ hedging against global risks.
Interest rate expectations influence sentiment
Expectations of policy changes by the Federal Reserve continue to shape the market outlook. The CME FedWatch tool shows a 59.4% probability of a 25 basis point rate cut at the December meeting. However, strategists like ANZ’s Soni Kumari warn that if the Fed skips or delays this cut, gold prices could see a decline in the near term. Recent dovish comments from Chicago Fed President Austan Goolsbee indicate that more rate cuts are in the offing, lending support to gold’s bullish outlook.