Gold Strengthens on Dollar Weakness and Investor Safe-haven Demand

 

Gold prices extended their rally for a third consecutive day, driven by heightened demand for secure assets amid escalating geopolitical tensions between Russia and Ukraine. Gold has been traded beyond $2,640 an ounce, rising over 2% in the first two days of the week. Its demand strengthened after Russian President Vladimir Putin expanded conditions for deploying atomic weapons, and Ukraine launched a missile strike into Russia. Historically speaking, when geopolitics were unstable, investors had invested in gold for stability. Not only geopolitical uncertainty but also a weaker US dollar caused strong gold this week. The dollar has retraced some of its earlier gains following Donald Trump’s presidential victory.

 

In response to gold's strength, Standard Chartered Plc analyst Suki Cooper stated that the combination of increasing geopolitical risks, wider market uncertainties, and lingering concerns since the pandemic has attracted investors to invest in gold as a secure investment. However, future Gold price trends depend on macroeconomic factors like the dollar’s strength and potential Fed rate cuts.

 

Gold has surged over 25% this year, supported by robust central bank purchases, the Federal Reserve’s shift toward monetary expansion, and geopolitical conflicts in Europe and the Middle East. Goldman Sachs projected that Gold could reach $3,000 an ounce by 2025.

 

As of the press time on November 20, spot gold rises 0.35% in the trading session of Singapore's market. The Bloomberg Dollar Spot Index held steady.

 

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