Gold aims for its best week in a year, rising over 1% earlier in Friday’s session, as the conflict between Russia and Ukraine escalated, triggering haven demand.
Russia fired a new missile at Ukraine on Thursday, Russian President Vladimir Putin said in a televised address to the country, saying the move was in response to Ukraine’s use of American and British missiles capable of striking deeper into Russia earlier this week. Gold is a traditional hedge against geopolitical uncertainty.
Traders in the yellow metal are also closely watching for signals on the Federal Reserve’s next moves on monetary policy amid President Donald Trump’s plans for increased tariffs and tax cuts, which could trigger a resurgence of inflation. Consumer sentiment data from the University of Michigan comes out Friday and may offer further direction.
February gold futures rose 0.9% Thursday to settle at $2,699.30 an ounce on Comex, and the most-active contract – which rolled from December this week – rallied 5% in the first four days of the week. Bullion rose 3.4% in October after gaining 5.2% in September and advancing 2.2% in August. The metal is up 30% in 2024. The December contract is currently up $21.20 (+0.79%) an ounce to $2696.10 and the DG spot price is $2607.10.
The Ukraine situation has escalated since U.S. President Joe Biden authorized Ukraine’s use of American missiles to strike limited targets inside Russia. The president had held off on giving the green light on this since the conflict began, but some analysts have speculated he’s trying to help Ukraine as much as he can before his term expires in January.
Separately, the Fed has been widely expected to continue interest rate cuts into 2025 as inflation has slowed to near target levels, but Trump’s tariff and tax plans have the potential to change the inflationary picture and those plans.
Of the investors tracked by the CME FedWatch Tool, 59.9% are betting that the Fed will cut rates by another 25 basis points in December, ending the year at 4.25% to 4.50%. The rest expect the central bank to keep rates unchanged next month. But the percentage of those expecting the Fed to keep rates unchanged has almost doubled in the past week.
A halt or delay in interest rates would be bearish for gold, which typically gets a boost from lower interest rates. The Fed cut interest rates by a total of 75 basis points in September and November to 4.50% to 4.75%. Before the Fed’s recent cuts, the central bank had kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022. The Fed began raising rates during the pandemic to combat surging inflation.
Front-month silver futures gained 1.2% Thursday to $31.38 an ounce on Comex, and the December contract increased 3.1% in the first four days of the week. Silver advanced 4.3% in October after rallying 7.9% in September and gaining 0.7% in August. It’s up 30% in 2024. The December contract is currently up $0.322 (+1.04%) an ounce to $31.265 and the DG spot price is $31.31.
Spot palladium increased 1.9% Thursday to $1,053.00 an ounce, and it’s up 9.1% so far this week. Palladium increased 11% in October after gaining 3.2% in September and rising 3.2% in August. Palladium is down 5.7% this year. The current DG spot price is down $24.40 an ounce to $1025.50.
Spot platinum gained 0.5% Thursday to $971.50 an ounce, and it increased 2.5% so far this week. Platinum rose 1.5% in October after increasing 5.6% in September and sliding 5.2% in August. Platinum is down 2.6% this year. The DG spot price is currently up $3.20 an ounce to $972.90.
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