Despite the decline, gold remains a popular safe-haven asset amid geopolitical tensions. Conflicts in Eastern Europe and the Middle East, combined with concerns about U.S. trade policy under President-elect Donald Trump, continue to sustain its appeal during uncertain times.
Silver reflects gold's decline amid dollar rally
Silver price (XAG/USD) followed a similar path, trading at $31.72 after hitting an intraday low of $31.52. The metal's bearish trajectory reflects the strength of the dollar and rising US Treasury yields.
However, like gold, silver retains its appeal as a safe haven as geopolitical instability continues.
Geopolitical uncertainty and interest rate expectations shape market sentiment
The dollar gained momentum as analysts expected a 25 basis point (bp) rate cut from the US Federal Reserve, solidifying expectations for a December rate cut. But Fed Chairman Jerome Powell's hawkish comments suggest the central bank may tread cautiously and keep bond yields high.
On the geopolitical front, rising tensions in Ukraine and the Middle East continue to cause instability in global markets. While military activity in these regions increases uncertainty, it also supports demand for gold and silver as safe investments.
Looking ahead: rate cuts and CPI data
Central banks around the world are also paying attention. The Bank of Canada is expected to cut interest rates, and the European Central Bank and Swiss National Bank could also do so later this week. Such a move could strengthen non-yielding assets such as gold.
