The price of gold increased by 0.6%, reaching a more than 4-week high, and extending the weekly gain to 0.9%. The precious metal, considered as a safe haven asset, is supported by the escalating geopolitical tensions, as well as expectations of further easing of the Fed's monetary policy at the December meeting.
Further growth in gold prices is being held back by the strengthening of the US dollar. The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.11% to 106.51.
Investors are also preparing for the release of US inflation data, which may help shape expectations about the Fed's policy for 2025. Experts said that if the data confirms consensus estimates, it will increase the likelihood of a Fed rate cut next week, and may give gold a boost. According to the CME FedWatch Tool, markets see a 86.1% probability of a 0.25% rate cut in December (compared to 78.1% a week ago), while the probability of an additional rate cut in January is 20.2%. Gold is considered a safe investment during economic and geopolitical turmoil and tends to thrive in a low-interest-rate environment.
Geopolitical tensions also remain in the spotlight. The Israeli military said it struck most of the strategic weapons stockpiles in Syria and hit two Syrian navy facilities, while the South Korean police raided the presidential office over martial law, Yonhap news agency reported.