Gold prices inched higher in Asian trading on Monday, driven by geopolitical unrest in Syria and South Korea, which boosted safe-haven demand. However, gains were capped by the strength of the U.S. dollar.
The yellow metal has shown limited movement in recent weeks, as heightened geopolitical tensions have been counterbalanced by uncertainty surrounding U.S. interest rates, leading traders to favor the dollar and Treasury bonds.
Spot gold rose 0.2% to $2,638.77 per ounce, while February gold futures held steady at $2,660.41 per ounce as of 23:17 ET (04:17 GMT).
Geopolitical turmoil fuels safe-haven demand for gold
The rise in gold demand was primarily driven by increased haven buying after rebel forces in Syria seized the capital, Damascus, and ousted President Bashar al-Assad, who has reportedly fled to Russia.
Markets are now focused on the potential implications of this regime change following Syria’s prolonged civil war. The rebel factions, backed in part by Turkey and aligned with the Sunni Islamic sect, are at odds with Iran. Additionally, reports indicated that Israel had entered Syrian territory, adding to regional tensions.
In South Korea, a deepening political crisis added to global uncertainty. President Yoon Suk Yeol was implicated in a criminal investigation involving a failed attempt to impose martial law. While Yoon survived an impeachment vote over the weekend, his political standing weakened as his party’s leadership suggested he would likely be sidelined and eventually forced to step down.
These geopolitical developments have bolstered demand for gold as a traditional safe-haven asset.
Gold gains were tempered by the strength of the U.S. dollar, which firmed ahead of key inflation data expected later this week.
Markets continue to anticipate a 25-basis-point interest rate cut by the Federal Reserve next week. However, uncertainty lingers over the central bank’s longer-term rate outlook. Persistently high inflation and robust economic performance may prompt a slower pace of easing in 2025.
Precious metals show mixed performance
Other precious metals showed weakness on Monday. Platinum futures remained flat at $935.75 per ounce, while silver futures declined 0.5% to $31.442 per ounce.
Copper pressured by China’s disinflation
Industrial metals also faced downward pressure, with copper prices slipping after softer-than-expected inflation data from China signaled ongoing economic challenges in the world’s largest copper importer.
Benchmark copper futures on the London Metal Exchange dropped 0.2% to $9,082.0 per ton, while February copper futures declined 0.3% to $4.1858 per pound.
China’s consumer inflation contracted more than anticipated in November, while producer prices extended their decline for a 25th consecutive month. The data underscores the limited impact of Beijing’s recent stimulus measures on reviving economic momentum.
