Geopolitical Unrest and Inflation Fears Propel Gold Surge

Highlights:

• Gold rebounds: At the time of writing, spot gold (XAU/USD) rose about 1% to $4,132.76 per ounce, recovering after two sessions of decline.
• Geopolitical tensions boost demand: Renewed risks from U.S. sanctions on Russia’s Lukoil and Rosneft (MCX: ROSN) and potential export curbs on China have driven investors toward safe-haven assets.
• Inflation data in focus: Markets await U.S. CPI data on Friday, expected to show core inflation at 3.1%, as traders price in a 25 basis-point rate cut by the Federal Reserve.

“At the time of writing,” spot gold rose around 1% to approximately $4,132.76 per ounce after two straight sessions of losses, as investors turned to the metal amid renewed geopolitical tensions and ahead of key U.S. inflation data. Futures contracts for December delivery traded higher, up about 2% at $4,145.60 per ounce.

Safe-Haven Flow from Geopolitics

The sudden uptick in gold prices comes against a backdrop of escalating geopolitical risks. The Donald Trump administration has imposed Ukraine-related sanctions on Russian oil giants Lukoil and Rosneft, and is weighing export controls on tech goods to China, elevating safe-haven interest. According to analysts, the same fundamentals that helped drive gold gains earlier this year remain firmly in place.

Eyes on U.S. Inflation, Rates and Central Bank Moves

The spotlight now shifts to the forthcoming U.S. consumer price index (CPI) report, expected to show core inflation around 3.1% for September. With markets already pricing in a 25 basis-point rate cut in the near term, the data could shape the direction of interest-rate policy by the Federal Reserve and influence gold’s appeal as a non-yielding asset. Because gold doesn’t pay interest, it becomes more attractive in lower-rate environments.

Outlook and Risks

While gold’s year-to-date gain of roughly 57% highlights its strength as a diversifier and hedge, a hotter-than-expected inflation print or a stronger U.S. dollar could weigh on bullion. On the flip side, if central banks continue accumulating gold and rate cuts proceed, upside remains for the yellow metal.

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