Gold prices rebounded sharply on Monday following six consecutive sessions of losses, as renewed safe-haven demand and a pause in the U.S. dollar's rally provided relief to investors. The uptick in gold and silver prices comes amid escalating geopolitical tensions after U.S. President Joe Biden authorized Ukraine to strike Russian territory using American-supplied long-range missiles. December gold futures rose by $30.10, settling at $2,600.20 per ounce, while silver prices posted strong gains, increasing by $0.463 to reach $30.895.
Gold's rally was driven in part by heightened geopolitical uncertainty as Russian President Vladimir Putin deployed North Korean troops along Ukraine's northern border in a move seen as an attempt to regain lost territory. Market analysts believe that the evolving geopolitical situation is adding a layer of uncertainty that is bolstering safe-haven demand for precious metals. "Fresh safe-haven buying and bargain hunting after recent selling pressure are featured to start the trading week," noted analysts.
Goldman Sachs recently named gold as one of its top commodity trades for next year, projecting an upside target of $3,000 an ounce by December 2025. The investment bank cited concerns about potential economic and market shifts under the incoming Trump presidency and broader geopolitical risks. Market participants were also focused on a pause in the U.S. dollar's rally, with the greenback holding flat below its one-year high reached last week. A softer dollar makes gold more affordable for buyers using other currencies, boosting demand.
Ross Norman, an independent market analyst, highlighted the role of currency fluctuations in gold price movements. "We can look to the dollar for a significant part of the current gold price corrections... I'm not saying you've found a solid physical floor yet, but clearly, some opportunistic buying is coming in to support the market as well," Norman said.
Monday's rebound comes after gold saw its largest weekly decline in over three years, driven by expectations that the Federal Reserve would be less aggressive in cutting interest rates. Investors are closely watching comments from several Fed officials due to speak this week, as the central bank's policy direction will influence gold's appeal as a non-interest-bearing asset. "Recent U.S. economic data has reduced expectations for a December rate cut by the Fed," market watchers noted.
The geopolitical developments in Eastern Europe and shifts in U.S. policy have provided additional layers of market complexity. President Biden's decision to authorize Ukrainian strikes into Russian territory represents a significant policy change, heightening tensions and prompting fears of further escalation. In a related move, North Korea's military involvement alongside Russian forces has drawn condemnation from Western leaders, adding further uncertainty to the global geopolitical landscape.
December gold's technical outlook remains mixed. Analysts pointed to near-term resistance at $2,620.00 and a critical support level at $2,500.00. Market sentiment reflects the precarious balance between gold's safe-haven allure and broader economic dynamics, including the potential for a stronger dollar as President-elect Donald Trump prepares to take office. Michael Langford, chief investment officer at Scorpion Minerals, commented, "Trump's inauguration is likely to see an ongoing strengthening of the USD, which is negative for gold in the short to medium term. However, as his stated policies are likely to be significantly inflationary in the long term, this will benefit gold."
Meanwhile, silver prices mirrored gold's rise, with spot silver increasing by 1.8% to $30.74 per ounce. Other precious metals also gained traction, with platinum and palladium climbing 1.6% and 2.1%, respectively. Analysts are forecasting continued volatility in gold and silver markets, driven by geopolitical developments, shifts in Fed policy expectations, and potential profit-taking by year-end.
