Investing.com — Gold prices rose in Asian trade on Thursday as rising tensions between Russia and Ukraine supported demand for the safe-haven asset and helped gold bullion weather a stronger dollar.
Gold prices rose for the fourth straight session, extending a rebound from more than two-month lows. However, the yellow metal's rise appears to be slowing as traders re-speculate their hopes for lower U.S. interest rates and pressure from the dollar.
By midnight ET (5 p.m. Japan time), the stock rose 0.2% to $2,656.84 an ounce, while December expiry rose 0.3% to $2,659.15 an ounce.
Tensions between Russia and Ukraine support gold demand
The yellow metal was supported by increased demand for safe havens amid rising tensions between Russia and Ukraine after the US allowed Kiev to use long-range missiles.
Russia responded by lowering its standards for nuclear retaliation, warning of a dire escalation of the conflict over the U.S. move. Ukraine launched a series of missile attacks on Russian territory this week using Western-made weapons.
Traders turned to gold amid fears of escalating conflict, helping the yellow metal recover after plummeting from record highs over the past two weeks.
Dollar, yield strength limits gold recovery
Gold has continued to fall sharply over the past two weeks, initially due to increased risk appetite following Donald Trump's victory in the 2024 presidential election.
President Trump's victory supported U.S. Treasuries and Treasuries yields as traders priced in the possibility of higher U.S. interest rates over the long term. The dollar traded just below its one-year high on Thursday.
Uncertainty over U.S. interest rates was further heightened by volatile inflation data released last week, while the Fed toned down its dovish tone in recent speeches.
Traders dialed back hopes for a rate cut in December.
Traders are pricing in a 25 basis point probability of a rate cut in December at 57.3%, up from 85.7% last week. Bets on hold rose to 42.7% from 14.3% the previous week.
This belief has put pressure on gold, as higher interest rates increase the opportunity cost of investing in the yellow metal.
Other precious metals also rose on Thursday, but have been trending lower over the past two weeks. It rose 0.4% to $970.35 an ounce and 0.7% to $31.225 an ounce.
Among industrial metals, the benchmark price on the London Metal Exchange rose 0.2% to $9,109.50 per tonne, while it fell 0.2% in December to $4.1442 per tonne.
Copper prices were depressed by growing concerns about a slowdown in Chinese demand, especially after recent stimulus measures and the country's disappointing economic data.
