Gold gains on softer dollar, widening Russia-Ukraine tensions

Nov 20 (Reuters) – Gold prices rose for a third consecutive session to a one-week high on Wednesday, driven by a softer dollar and escalating Russia-Ukraine tensions that raised the demand for safe-haven assets.

Spot gold added 0.32% to $2,640.19 per ounce by 0323 GMT, its highest since Nov. 11. U.S. gold futures climbed 0.5% to $2,643.70.

The U.S. dollar rally paused after hitting a one-year high last week, making bullion more appealing to buyers holding other currencies.

Russian President Vladimir Putin lowered the threshold for a nuclear strike in response to a broader range of conventional attacks, days after reports said Washington had allowed Ukraine to use U.S.-made weapons to strike deep into Russia.

“The U.S. authorization and Russia’s response, which could lead to a tactical nuclear weapon, is contributing to market uncertainty, boosting safe-haven assets like gold… On the upside, the key resistance to watch is around $2,700,” said Ilya Spivak, head of global macro, at Tastylive.

Elsewhere, several Federal Reserve officials this week are expected to potentially shed light on the U.S. rate cut trajectory.

Currently, traders see a 58.9% chance of a 25-basis-point cut in December. Recent strong data and U.S. President-elect Donald Trump’s proposed tariffs have pointed to rates remaining higher for longer.

The market is adjusting its expectations for the Fed’s cuts next year as inflation is becoming a bigger concern, which could be negative for gold, Spivak added.

Higher rates reduce the appeal of non-yielding gold.

Meanwhile, Kansas City Fed President Jeffrey Schmid said that it remains uncertain how far rates can fall, though the initial reductions made by the U.S. central bank are a vote of confidence that inflation is returning to its 2% target.

Spot silver was steady at 31.22 per ounce, platinum added 0.1% to $975.10 at $973.90 and palladium flat at $1,035.43.