Gold spikes amid tensions but can’t shake off weekly losses

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Gold gains 0.67% in late session, but geopolitical strife keeps it above $2,600 despite monthly losses. Escalation in Russia-Ukraine conflict and Middle East tensions underline Gold’s safe-haven appeal. Market optimism grows for a 25 bps Fed rate cut in December, bolstering Bullion’s short-term prospects.

Gold’s price advanced late during the North American session on Friday, up by 0.67%, yet it remains set to print monthly losses of over 3%. Geopolitical risks continue to drive price action with the non-yielding metal fluctuating at around $2,600. The XAU/USD trades at $2,652 after hitting a daily low of $2,634.

Geopolitical tensions eased in the Middle East after Israel and Lebanon agreed to a ceasefire. Nevertheless, both countries accused each other of violating the agreement.

Recently, Sky News Arabia revealed that the Israeli Army announced the bombing of a mobile rocket platform belonging to Hezbollah in southern Lebanon in an air strike.

Gold prices could remain bid after the escalation of the Russia-Ukraine conflict. During the week, Russia attacked Ukraine’s energy infrastructure and threatened to attack with ballistic missiles. Russia’s response is a retaliation to the US and UK authorizing the deployment of missiles manufactured in both countries inside Russia.

In November, Bullion prices were hampered by US President-elect Donald Trump’s victory on November 5. Some of his proposals are inflation-prone, like imposing tariffs and cutting taxes.

This bolstered the Greenback, which is set to end November with gains of over 2%, according to the US Dollar Index (DXY). Speculation that the new US administration’s fiscal policy is expansionary might prevent the Federal Reserve (Fed) from continuing to lower interest rates.

The choice of Scott Bessent as Treasury Secretary for the upcoming Trump administration calmed the markets and bolstered Gold prices last week. Investors see Bessent as market-friendly, which could moderate harsh Trump trade policies.

Consequently, market participants are optimistic that the Fed will cut rates by 25 basis points at the December meeting. According to the CME FedWatch Tool, the swaps market sees a probability of 66% of such a decision.

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