Global gold prices experienced a significant surge last week, marking their best weekly performance in 20 months. The rise was driven by increased demand for safe-haven assets amid the ongoing escalation between Russia and Ukraine, despite the continued strength of the US dollar.
The price of gold rose by 6% over the past week, reaching a two-week high of $2,716 per ounce, after opening at $2,567 per ounce. This marked the first weekly gain for gold after three consecutive weeks of decline, which had pushed prices to a two-month low of $2,536 per ounce. According to Gold Bullion’s analysis, gold recovered more than half of its previous losses within just one week.
The yellow metal achieved five consecutive sessions of gains, surpassing the $2,700 per ounce level and closing the week at $2,716 per ounce. On Friday alone, gold recorded a 1.8% increase, reflecting strong market momentum.
The primary driver of last week’s significant price rise was the renewed demand for safe-haven assets, fueled by the escalating Russian-Ukrainian conflict. The situation intensified after both countries deployed long-range missiles and Russia adjusted its nuclear doctrine, further heightening geopolitical risks.
As the week concluded, demand for gold surged as investors sought refuge ahead of the weekend, anticipating potential new developments in the conflict. This allowed gold to outperform other commodities and investments.
Despite the strength of the US dollar—which climbed for the third consecutive week to reach its highest level in two years against a basket of major currencies—gold prices continued to rise. The dollar’s strength was supported by robust demand as a safe-haven currency, coupled with uncertainty surrounding monetary policy and interest rate changes.
Additionally, US government bond yields remained near their highest levels in six months, a factor that typically pressures gold prices. However, strong safe-haven demand enabled gold to overcome these headwinds, recovering recent losses and sustaining its upward trajectory.
Market uncertainty persists over potential policies under Donald Trump’s administration that could impact the US economy and interest rates. Currently, there is a 60% probability that the Federal Reserve will cut interest rates by 25 basis points in its December meeting, with a 40% chance that rates will remain unchanged.
The Federal Reserve has already adopted a cautious monetary easing approach, cutting interest rates by 50 basis points in September, followed by another 25 basis point reduction in November. While this reflects caution, it does not indicate pessimism regarding the broader economic outlook under the incoming administration.
Conversely, the World Gold Council reported a decline of 23.7 tonnes in global gold-backed investment fund flows during the week ending November 15, marking the second consecutive weekly outflow. These declines were primarily led by funds in Europe and Asia, influenced by the record highs reached by gold and the recent correction wave in prices. This trend encouraged investors to pivot toward riskier assets, particularly following Donald Trump’s election victory.
However, gold-backed fund flows are expected to rebound in the final week of November, driven by growing demand for safe-haven assets amid the heightened geopolitical tensions of the past week.
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