Gold and oil surge on Ukraine war fears

Gold, oil, and haven assets from the Swiss franc to German government debt have been heading for strong weekly gains after the Russia-Ukraine conflict escalated, while European gas price rises and poor economic data heaped pressure on the euro. In a week when Russia lowered its threshold for using nuclear weapons and fired a hypersonic intermediate-range ballistic missile at Ukraine, gold was set for its best week in a year. The euro tumbled on Friday to its lowest since December 2022, last at $US1.0432 and down 0.4 per cent on the day after surveys showed business activity in the bloc took a surprisingly sharp turn for the worse in November. European gas contracts hit a one-year high, broadening concerns for the euro zone economy already pressured by US President-elect Donald Trump's proposed trade tariffs, Germany's government collapse and France's wide budget deficit. Brent crude futures gained 0.5 per cent to $US74.60 a barrel, up five per cent this week, after Russia responded to the US and UK allowing Kyiv to strike its territory with Western weapons by firing a hypersonic intermediate-range missile at Ukraine's Dnipro. The index tracking the US dollar against rival currencies climbed to a 13-month peak of 107.15 on Friday, boosted by haven buying as well as expectations that Trump's America-first policies would boost growth and inflation. Bets that Trump's administration would take a lighter-touch approach to regulation propelled bitcoin to the brink of $US100,000 for the first time. Gold was up one per cent at $US2,688 an ounce and 5.2 per cent higher for the week, while sterling dropped 0.4 per cent on the day to a six-month low of $US1.253. Traders expect Trump's tariffs to boost domestic consumer prices, with money markets pricing about a 58 per cent chance of a Federal Reserve rate cut in December, down from 83 per cent a week ago. That has restricted haven buying of US Treasuries, usually considered the world's least risky and most liquid financial assets, with the benchmark 10-year yield down just 2 basis points this week at 4.3892 per cent. Geopolitical concerns have raised appetite for European haven assets, however. Germany's 10-year Bund yield dropped 7 bps to 2.244 per cent on Friday, reflecting forecasts for faster European Central Bank rate cuts. The Swiss franc, at 0.9264 euros, was on course for a 1.7 per cent weekly gain. In equities, traders' reassessment of artificial intelligence chip-making giant Nvidia's prospects following a lukewarm response to its results earlier this week supported global stocks. MSCI's world stock index was set for a 1.1 per cent weekly rise although Europe's Stoxx 600 traded flat to head for its fifth straight weekly loss. Britain's exporter-heavy FTSE 100 got a 0.7 per cent daily boost from sterling weakening against the dollar, set for its best week since August, although futures hinted at mild losses for Wall Street's blue-chip S&P 500 later in the day. In Asia, chip makers' stocks helped with Taiwanese gain 1.5 per cent, South Korea's tech-heavy rose 0.8 per cent and Japan's Nikkei advancing 0.8 per cent. Disappointing corporate earnings weighed on sentiment in China, with the blue-chip CSI300 index down 3.1 per cent on Friday and Hong Kong's Hang Seng Index 1.9 per cent lower. Data in Japan showed core inflation held above the central bank's two per cent target in October, leading markets to price about a 57 per cent chance of a 25-basis-point Bank of Japan rate hike in December although the yen remained weak. The Japanese currency was last at 154.82 per dollar after sliding four per cent this quarter.