Gold prices saw a fourth consecutive day of gains on Thursday (November 21), driven by a surge in safe-haven demand as geopolitical tensions escalate, particularly the ongoing Russia-Ukraine conflict.

Spot gold rose by 0.3%, reaching $2,657.40 per ounce, the highest since November 11.

US gold futures also gained 0.3%, hitting $2,659.90.

In India, the price of gold remained robust with 22-carat gold priced at 7,145 per gram, and 24-carat gold at ₹7,795 per gram.

Why are gold prices rising?

The escalation of the Russia-Ukraine conflict has spooked markets, pushing investors toward gold, traditionally seen as a hedge against economic and geopolitical risks.

Ukraine’s recent missile strikes on Russia, along with US vetoes at the UN Security Council, have heightened global tensions, which in turn boost demand for gold.

Kyle Rodda, a financial market analyst at Capital.com, notes that “subsequent fears of a broader regional conflict involving nuclear threats are pushing up gold prices.”

The US dollar and gold: A fragile balance

Gold’s rally is also supported by a weakening US dollar. As the dollar drops by 0.1%, it makes gold more affordable for international buyers.

Gold, priced in dollars, typically thrives when the greenback weakens, as it reduces the opportunity cost of holding non-yielding assets like gold.

The market is closely monitoring the US Federal Reserve’s policy outlook, with expectations of a 25-basis-point rate cut in December.

While this may provide some support to gold, its long-term outlook remains bullish.

A reduction in interest rates generally decreases the opportunity cost of holding gold, further driving demand.

What should investors do?

As gold prices continue to rise, investors should keep a close eye on global developments.

For short-term traders, technical levels such as the $2,660 per ounce area could act as resistance.

A break above this level may trigger a further rally.

On the other hand, a dip below $2,550 per ounce could signal a correction, making it an opportunity for bargain hunters.

Gold experts, such as Renisha Chainani, Head of Research at Augmont Gold, suggest that gold has moved from an overbought zone to an oversold one. The metal is expected to rebound to ₹76,500 and ₹77,400 per 10 grams in the near term, especially in India, where demand tends to rise during the wedding season.

For long-term investors, the outlook remains positive.

Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions, points out that the ongoing geopolitical tensions and possible monetary easing by the US Federal Reserve in 2025 will likely push gold prices back to their recent highs.