The price of gold has increased for the fourth day in a row, driven by a weakened US dollar and heightened demand for safe-haven assets amid escalating tensions in Ukraine.

On Friday, bullion jumped as much as 1.1%, reaching nearly $2,666 per ounce, following Russian President Vladimir Putin’s warning that his military could target “decision-making centers” in Kyiv with ballistic missiles. Meanwhile, the dollar fell against key currencies, with the dollar index set for its first weekly drop in two months, making gold more appealing to a wider range of investors.

However, despite this upward trend, bullion is still down about 2% for the week due to signs of reduced tensions in the Middle East, with a US-mediated cease-fire between Israel and Hezbollah scheduled to begin on November 27.

This year, gold prices have risen nearly 30%, supported by the US Federal Reserve’s monetary easing, purchases by central banks, and escalating geopolitical and economic uncertainties. Some analysts predict that new record highs could be reached in 2025, with optimistic forecasts released this month by both Goldman Sachs Group and UBS Group AG.

As of 10:24 a.m. in London, spot gold was up 0.9% to $2,662.52 per ounce. The Bloomberg Dollar Spot Index decreased by 0.2% and has fallen by 1.1% this week. Other precious metals, including silver, platinum, and palladium, also experienced gains.

Swaps markets are currently assigning a two-thirds probability that the Fed will cut borrowing costs again next month, a significant increase from nearly even odds earlier this week. Generally, lower borrowing costs benefit gold, which does not yield any interest.

© 2024 Bloomberg

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