Gold Prices Surge Amid Geopolitical Tensions and Dollar Weakness

Gold prices have reached unprecedented levels, nearing $4,500 per ounce, driven by a combination of geopolitical instability and a weakening United States dollar. The spot price of gold increased by 0.8 per cent to $4,482.70 before hitting a session peak of $4,497.55. Concurrently, U.S. gold futures for February delivery rose by 1 per cent to $4,514.70.

Analysts cite various factors contributing to this surge. Carlo Alberto De Casa, an external analyst at Swissquote, noted that the persistent demand for gold stems from expectations of a dovish Federal Reserve, declining confidence in the dollar, and ongoing geopolitical tensions. He stated, "Investors' lust for gold remains massive due to a mix of all factors above."

The dollar has been under pressure, marking its most significant annual decline since 2017. This decline is influenced by a series of recent U.S. policy decisions. In particular, U.S. President Donald Trump’s recent actions against oil tankers associated with Venezuela have heightened market uncertainties. Trump’s administration has implemented a blockade of sanctioned vessels entering and leaving Venezuela, with the President not ruling out the possibility of military action.

Market analysts predict further monetary easing, with traders currently expecting two interest rate cuts from the Federal Reserve in 2026. These expectations have been reinforced by discussions surrounding a potential change in leadership at the Fed, where Trump is anticipated to nominate a new chair early next year.

Gold bullion has appreciated by more than 70 per cent this year, as investors have sought refuge amidst global tensions and favourable interest rate conditions. Silver has also experienced remarkable growth, rising 0.9 per cent to $69.61 per ounce after reaching a record high of $69.98 earlier. The silver market has seen a year-to-date increase of 141 per cent, attributed to supply deficits, industrial demand, and significant investment inflows.

Ahmad Assiri, a research strategist at Pepperstone, highlighted that both gold and silver are being viewed as less constrained by hard price ceilings, indicating strong support for both metals as they head into the holiday season. Additionally, platinum prices surged by 3 per cent to $2,183.63, marking the highest price seen in over 17 years, while palladium rose by 3.2 per cent, reaching a three-year high of $1,815.76, following the upward trends in gold and silver.

The ongoing developments in the global economic landscape continue to shape market dynamics for precious metals, with investors closely monitoring geopolitical events and central bank policies as they navigate these uncertain times.