Gold futures (GC=F) hovered at a one-week high to trade near $2,630 per ounce on Tuesday as traders assessed the threat of a nuclear escalation in the Russia-Ukraine war.

The precious metal extended its gains from Monday as investors flocked to the asset traditionally seen as a safe haven during times of geopolitical uncertainty.

On Tuesday, Russian President Vladimir Putin signed a revised nuclear doctrine, formally lowering the threshold for Russia's use of its nuclear weapons. The move followed a decision by the Biden administration to allow Ukraine's use of long-range US-made missiles to strike deep into Russia.

"Geopolitical risks have reemerged, driving demand for gold and solidifying its role as a reliable hedging asset," Ahmad Assiri, research strategist at foreign exchange broker Pepperstone, said in a note on Tuesday.

Gold had been on a tear up until the US elections on Nov. 5. It has since fallen as the US dollar has risen and the US Dollar Index (DX-Y.NYB) strengthened over the past week. Still, the precious metal is up about 27% year to date, beating the S&P 500's (^GSPC) gain of 23% over the same period as central banks have boosted their gold reserves.

Over the weekend, Goldman Sachs analysts recommended investors go "long gold" as central banks continue to accumulate the asset.

"The gold price consolidation following the orderly US election — flushing speculative positioning from near all-time highs — provides an attractive entry point to buy gold," wrote Goldman analysts.

The firm maintains a $3,000 price target by the end of 2025.

The Federal Reserve’s recent pivot toward lower interest rates has helped accelerate the commodity’s gain in recent months, given it is a non-yield-bearing asset.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.

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