Gold price set for biggest weekly jump in 20 months on haven demand

Gold headed for the biggest weekly gain since March last year as an escalation in the Russia-Ukraine conflict boosted its haven appeal, with traders also assessing prospects for further easing by the Federal Reserve.

Bullion rose by as much as 1.5% to $2,710.16 an ounce after Ukraine said Russia launched a “new” kind of ballistic missile at the city of Dnipro in an alarming signal to Kyiv’s Western backers. Heightened geopolitical tensions tend to drive investors to safety assets, such as gold.

“The tit-for-tat escalation between Russia and Ukraine has lifted the geopolitical temperature to higher levels than those seen during the year-long war between Israel and Iran-backed militants, and markets have responded accordingly,” said Ole Hansen, head of commodities strategy at Saxo Bank.

The renewed haven demand “has injected fresh momentum back into the market following an early November correction,” Hansen added.

Traders were also weighing comments from Fed Bank of Chicago President Austan Goolsbee, who said he sees interest rates moving “a fair bit lower,” and expressed confidence inflation is easing toward the central bank’s target. Lower rates typically benefit bullion as it doesn’t pay interest.

The precious metal has surged more than 30% so far this year, supported by healthy central bank buying, increasing safe-haven demand and the Fed’s cycle of cutting interest rates. The precious metal’s rally was dented in the weeks following the re-election of Donald Trump, as the dollar surged, weighing on commodities.

There are widespread expectations for fresh records in 2025, with Goldman Sachs Group Inc. and UBS Group AG both issuing bullish outlooks for the precious metal in recent days.

Spot gold was up 1.3% at $2,704.11 as of 12:40 p.m. in New York, taking its weekly gain to 5.5% so far this week, its best performance since March 2023. The Bloomberg Dollar Spot Index rose 0.4%, extending two days of gains. Silver and platinum rose, while palladium fell.

(By Sybilla Gross and Jack Ryan)