Gold prices have edged higher as the U.S. dollar weakens slightly, giving the yellow metal some breathing room after a holiday lull. Spot gold rose by 0.4%, reaching $2,627.55 an ounce, while February gold futures increased by 0.1%, settling at $2,643.86 an ounce. The shift in the dollar index, which hovered near a two-year high, reflects a balance between the U.S. Federal Reserve’s hawkish stance and cautious investor behavior.
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Geopolitical Tensions Add Fuel to Gold’s Rally
Simultaneously, geopolitical tensions are adding a layer of urgency to gold’s appeal. With ongoing tensions between Hamas and Israel, the risk of further instability in the Middle East is stirring demand for safe-haven assets. As both sides continue to accuse one another of hindering ceasefire negotiations, gold’s role as a hedge against uncertainty remains critical.
Dollar’s Strength Still Caps Gold’s Potential
Despite the dollar’s slight dip, it remains near its two-year peak, keeping a lid on gold’s gains. According to Investopedia, higher U.S. interest rates continue to make the greenback more attractive, but the uncertainty in global markets is giving gold a boost.
Which Is Best Gold Stock to Invest in?
In the meantime, gold-focused stocks such as Barrick Gold (GOLD), Newmont Mining (NEM), or Franco-Nevada (FNV) can be a good way of gaining exposure to the rally. The TipRanks Stock Comparison tool indicates the highest potential upside of 46% in Barrick Gold over the next 12 months.
