Gold prices edged higher in Asian trading on Wednesday as South Korea’s political turmoil fueled some safe-haven demand. However, traders remained cautious, awaiting further signals on U.S. interest rate policy.
The yellow metal found some support earlier in the week amid fears of a breakdown in the Israel-Hezbollah ceasefire, which also boosted demand for safe-haven assets. However, gains in gold were capped by a stronger dollar, as the greenback surged on uncertainty surrounding the long-term outlook for U.S. interest rates.
By 23:25 ET (04:25 GMT), spot gold was up 0.1% at $2,646.53 per ounce, while gold futures for February delivery rose by 0.1% to $2,668.60 per ounce.
South Korea’s Crisis Underpins Haven Demand
Political uncertainty in South Korea deepened after President Yoon Suk-Yeol declared martial law on Tuesday, only to rescind the decision shortly afterward following widespread opposition from Parliament and citizens.
The failed declaration, combined with calls for Yoon’s impeachment by the opposition party, has plunged the country into its worst political crisis since the 1980s. The turmoil has dampened investor sentiment across Asia, as South Korea is considered a key pillar of the East Asian economy, prompting some investors to seek safety in gold.
Heightened Israel-Lebanon Tensions Add Pressure
Tensions between Israel and Lebanon also contributed to increased safe-haven buying. Israel warned it would hold Lebanon’s government accountable for any collapse in the ceasefire with Hezbollah. Over the past week, both sides launched strikes, breaching a U.S.-brokered truce and fueling concerns of further escalation. Metal Markets Weighed Down by Dollar Strength Ahead of Powell’s Speech
Metal prices remained subdued on Wednesday as traders awaited remarks from Federal Reserve Chair Jerome Powell, seeking further clarity on the future trajectory of interest rates.
Powell’s speech, scheduled for later in the day, comes just weeks ahead of the Fed’s final policy meeting of the year. While a 25-basis-point rate cut is anticipated in December, uncertainty about the long-term rate outlook persists due to persistent inflation and inflationary policies under the Trump administration.
This uncertainty has driven significant gains in the dollar, applying pressure across the metals market.
Among precious metals, platinum and silver saw little movement on Wednesday. In industrial metals, benchmark copper futures on the London Metal Exchange slipped 0.3% to $9,096.00 per ton, while February copper futures edged down 0.2% to $4.1895 per pound.
