Gold Prices Rise Amid Geopolitical Turmoil

Gold prices rose slightly in Asian trade on Monday due to geopolitical turmoil in Syria and South Korea, which spurred some safe haven demand, although a strong dollar limited most gains.

The yellow metal has shown a muted performance in recent weeks as heightened geopolitical tensions were countered by increased uncertainty over U.S. interest rates, leading traders to favor the dollar and Treasuries.

Spot gold rose 0.2% to $2,638.77 an ounce, while gold futures for February steadied at $2,660.41 an ounce by 23:17 ET (04:17 GMT).

Syria, S. Korea Turmoil Spurs Some Gold Demand

The demand for gold increased significantly after rebel forces gained control of Syria's capital Damascus, ousting President Bashar al-Assad, who fled to Russia. Investors are eager to understand the implications of this regime change following a prolonged civil war. The rebels, partially supported by Turkey and connected to the Sunni Islamic sect, are at odds with Iran.

Additionally, it was reported that Israel had also entered Syrian territory.

In South Korea, a leadership crisis escalated over the weekend as prosecutors named President Yoon Suk Yeol in a criminal investigation related to a failed attempt to impose martial law last week. He survived an impeachment vote, but leaders within his party suggested he may eventually have to resign.

These two geopolitical crises spurred increased safe haven demand for gold, although gains were capped by a strengthening dollar, which firmed ahead of key inflation data due this week.

Markets have widely anticipated that the Federal Reserve will cut interest rates by 25 basis points next week. However, the long-term outlook on rates has become uncertain, with persistent inflation and economic resilience likely leading to a slower pace of easing in 2025.

Other precious metals mostly decreased on Monday, with platinum futures steady at $935.75 an ounce, while silver futures fell 0.5% to $31.442 an ounce.

Copper Dented by China Disinflation

In the industrial metals sector, copper prices decreased on Monday as weaker-than-expected Chinese inflation data indicated ongoing economic strain in the top importer, China.

Benchmark copper futures on the London Metal Exchange fell 0.2% to $9,082.0 a ton, while February copper futures decreased by 0.3% to $4.1858 a pound.

Chinese consumer inflation contracted more than expected in November, and producer inflation fell for the 25th consecutive month amid limited signs of improving economic conditions in the country, despite recent stimulus measures from Beijing.