Gold prices saw a modest increase on Friday, February 28, 2025, as investors turned to the precious metal amid escalating political and economic uncertainty in Italy. The unfolding crisis in the Eurozone’s third-largest economy has sparked renewed interest in safe-haven assets, pushing gold to edge higher in early trading sessions.
Spot gold rose 0.4% to $2,645.30 per ounce by mid-morning, after touching a one-week high earlier in the day. U.S. gold futures also climbed, gaining 0.5% to settle at $2,658.10. The uptick comes as market participants closely monitor developments in Italy, where a deepening political standoff has raised fears of a potential financial contagion across the region.
Italy’s troubles stem from a combination of a faltering coalition government and mounting concerns over its fiscal health. The country’s public debt, already one of the highest in the European Union at over 140% of GDP, has come under fresh scrutiny following disagreements over budget reforms. With borrowing costs creeping up and investor confidence waning, speculation about a possible credit rating downgrade has intensified. This has rattled European markets and sent ripples through global financial systems.
Analysts point to these uncertainties as the primary driver behind the renewed interest in gold. The metal, long regarded as a hedge against economic instability and currency fluctuations, tends to perform well during periods of geopolitical tension or fiscal distress. The situation in Italy has amplified such sentiments, with traders seeking to shield their portfolios from potential fallout.
The euro weakened slightly against the dollar, slipping 0.2% to $1.045, as the Italian crisis weighed on the common currency. A stronger dollar typically exerts downward pressure on gold, which is priced in the U.S. currency. However, the safe-haven demand appears to have outweighed this effect for now, allowing gold to maintain its upward trajectory.
Beyond Italy, broader market dynamics are also supporting gold’s appeal. Inflation pressures remain a concern in several major economies, with central banks adopting a cautious stance on interest rate hikes. While higher rates can dampen enthusiasm for non-yielding assets like gold, the current environment of uncertainty has kept investors on edge. In the United States, the Federal Reserve’s recent signals of a measured approach to tightening monetary policy have added to the complex backdrop influencing gold prices.
Market watchers also noted a surge in demand for physical gold, with reports of increased buying from exchange-traded funds (ETFs) and retail investors. Holdings in gold-backed ETFs rose by 1.2 million ounces this week, reflecting a growing appetite for the metal as a store of value. This trend underscores the perception that gold remains a reliable anchor amid turbulent times.
The Italian crisis is not occurring in isolation. Global equity markets have displayed signs of unease, with European indices such as the FTSE MIB in Milan dropping 1.3% in the latest session. The sell-off in riskier assets has further bolstered gold’s status as a preferred refuge. Meanwhile, other safe-haven assets like the Swiss franc and U.S. Treasuries have also seen inflows, though gold’s gains have captured the most attention.
Looking ahead, the trajectory of gold prices may hinge on how Italy’s situation unfolds. Should the political impasse lead to snap elections or a failure to pass a credible budget, the risk of a broader Eurozone crisis could escalate. Such an outcome might propel gold to test recent highs, potentially nearing the $2,700 mark last seen in late 2024. Conversely, a swift resolution in Rome could ease pressure on safe-haven assets, though few expect an immediate fix given the complexity of Italy’s challenges.
For now, gold’s modest advance reflects a cautious optimism among investors who see it as a buffer against unpredictability. Trading volumes suggest that the metal could face resistance near $2,660, but sustained buying pressure might push it beyond that threshold in the coming days. As the Italian crisis continues to dominate headlines, gold’s role as a barometer of global unease is likely to remain in sharp focus.
In the wider commodities space, silver also ticked up 0.6% to $31.45 per ounce, tracking gold’s gains, while platinum and palladium saw mixed results. The precious metals complex, however, remains overshadowed by gold’s prominence as the go-to asset in times of distress. With markets bracing for further developments, the yellow metal’s quiet strength speaks volumes about the current state of global sentiment.
