Investing.com– Gold prices rose in Asian trading on Friday, benefiting from a weaker dollar as traders bet on an interest rate cut in December, while heightened geopolitical tensions also pushed the demand for safe havens.
The yellow metal suffered some losses during the week after the announcement of a ceasefire between Israel and Hezbollah. But increased tensions between Russia and Ukraine allowed prices to pare their weekly losses on Thursday and Friday.
Gold rose 0.9% to $2,660.69 an ounce, while February expiry rose 0.9% to $2,684.75 an ounce as of 7:40 a.m.
Tensions between Russia and Ukraine boost demand for safe haven assets
Russia launched its second major attack on Ukraine's energy infrastructure this week, and also threatened to attack areas of kyiv with advanced ballistic missiles.
Moscow's offensive was launched in response to Ukraine's use of long-range Western-made missiles against Russia, which the latter said would mark a serious escalation in the conflict.
At the beginning of November, Russia also lowered the threshold for its nuclear retaliation.
In the Middle East, doubts have arisen over the recent ceasefire between Israel and Hezbollah, with both sides accusing each other of violating the truce.
Dollar weakness boosts gold as markets bet on interest rate cut in December
Gold's rise was also helped by the dollar's decline, with markets continuing to believe the Federal Reserve will cut interest rates further in December.
Traders give a 68.6% chance that the Fed will cut rates by 25 basis points, and a 31.4% chance that rates will remain unchanged, according to the .
Bets on a December cut persisted even as recent data showed resilience in U.S. inflation, as Fed officials backed a gradual easing of rates.
The has fallen sharply this week, also giving up some gains made in the wake of Donald Trump's election victory earlier this month.
But the long-term outlook for U.S. interest rates is uncertain, given that inflation remains well above the Fed's 2% target. Trump's expansionary policies are also expected to support inflation and interest rates.
Several Fed officials, including , are scheduled to give speeches next week, ahead of the December interest rate decision.
Metal prices rose on Friday, driven by the decline in the dollar. Gold rose 1.1% to $947.35 an ounce, while oil rose 1.5% to $31.157 an ounce.
Among industrial metals, the benchmark on the London Metal Exchange rose 0.7% to $9,061.50 a tonne, while the February rate rose 0.8% to $4.1640 a pound.
Copper markets were expecting China, the main importer, to be released on Saturday. The index is expected to show a recovery in activity after Beijing rolled out a series of stimulus measures over the past two months.
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