Gold Price Surge Amidst Geopolitical Tensions and Fed Speculation
Spot gold increased by 0.47% to $4,477.42 per ounce following a session low of $4,406.89. Meanwhile, US gold futures dipped slightly by 0.57% to $4,487.90 per ounce.
Annual Rebalancing of Bloomberg Commodity Index
This week marks the annual rebalancing of the Bloomberg Commodity Index, a periodic adjustment of commodity weights to align with market conditions. This rebalancing may cause short-term pressure on gold and silver prices.
According to Bob Haberkorn of RJO Futures, “During the coming sessions, gold and silver will be under pressure as the commodity index is rebalanced. Once the dust settles mid-next week, it will present a good opportunity for longer-term investors to re-enter the market.”
Investor Focus on US Non-Farm Payrolls Report
Investors eagerly await the US non-farm payrolls report to gain further insight into the Federal Reserve’s monetary policy.
- Reuters survey predicts 60,000 job creations in December, down from 64,000 in the previous month.
- The unemployment rate is forecasted to drop from 4.6% to 4.5%, according to the survey.
- The market currently prices in two interest rate cuts by the Federal Reserve this year.
Geopolitical Tensions and Metal Market Fluctuations
Ongoing geopolitical tensions were highlighted by the seizure of two Venezuela-linked tankers in the Atlantic, along with reports that US Secretary of State Marco Rubio will meet Danish leaders next week to discuss Greenland.
HSBC now believes that gold will reach $5,000 per ounce in the first half of 2026 due to geopolitical risks and growing fiscal debts.
- Spot silver fell 1.52% to $77.01 per ounce.
- Platinum dropped 0.86% to $2,249.55 per ounce.
- Palladium rose 0.60% to $1,795.75 per ounce in the international market.
Copper and Nickel Prices Decline
The three-month copper reference price on the London Metal Exchange (LME) closed at $12,702.55 per tonne, a 1.47% decrease from its high of $13,387.5 due to supply concerns in mines and anticipation of future demand growth.
According to Sucden Financial analysts, “The mirror movements with precious metals suggest profit-taking and position squaring rather than a significant trend shift.”
Goldman Sachs raised its copper price forecast for the first half of 2026 from $11,525 to $12,750 due to a scarcity premium driven by limited inventories outside the US.
- Nickel fell 4.22% to $17,048.00 per tonne after Indonesia failed to disclose its 2026 production quota, breaking a strong rally since December that pushed the metal to its highest level since mid-2024 at $18,800.
Aluminum rose 0.08% to $3,089.05 per tonne; zinc dropped 1.30% to $3,133.85 per tonne; lead declined 1.79% to $2,022.45 per tonne.
Key Questions and Answers
- Q: Why is gold price movement significant? A: Gold’s rise indicates market anticipation of the Federal Reserve’s future monetary policy decisions, as well as geopolitical tensions.
- Q: What is the annual rebalancing of the Bloomberg Commodity Index? A: It’s a periodic adjustment of commodity weights to maintain alignment with current market conditions, which may temporarily impact gold and silver prices.
- Q: How do geopolitical tensions affect metal markets? A: Ongoing geopolitical events, such as the seizure of Venezuela-linked tankers, can create uncertainty and influence metal prices.
- Q: What factors contribute to copper and nickel price fluctuations? A: Supply concerns in mines, anticipation of future demand growth, and geopolitical tensions all play a role in copper and nickel price movements.
