Gold extended gains in Asian trading on Thursday as a sharp escalation in Middle East hostilities drove investors toward traditional safe-haven assets, with an easing U.S. dollar offering further encouragement for bullion buyers.
Price moves - Spot gold was last recorded up 0.8% at $5,179.60 an ounce by 21:09 ET (02:09 GMT), while U.S. Gold Futures were down 0.3% at $5,188.29. The metal had climbed 1% in the previous session, recovering some ground after a near 5% pullback on Tuesday that coincided with a period of dollar strength.
Geopolitical drivers - Tensions in the Middle East intensified after the U.S. sank an Iranian warship in international waters. Iran reportedly continued missile strikes into several countries in the region and was said to have targeted critical energy infrastructure. These developments have raised worries about the prospect of a broader, protracted regional conflict, encouraging investors to reduce holdings in risk-sensitive assets and increase exposure to gold, which is commonly used as a hedge during geopolitical uncertainty.
Adding to the uncertainty, Tehran rejected a report that its Ministry of Intelligence had contacted Washington to negotiate an end to the hostilities, calling the account "pure falsehood."
Currency and policy backdrop - The U.S. Dollar Index traded flat after slipping 0.3% overnight, following two consecutive sessions of strong gains earlier in the week. A softer dollar tends to make dollar-denominated commodities like gold more appealing to holders of other currencies.
Markets also received news on U.S. monetary leadership: President Donald Trump officially nominated Kevin Warsh as the next Federal Reserve Chair, a nomination that market participants interpreted as leaning toward policies friendly to rate cuts.
Outlook - With the Middle East conflict showing few signs of abating and lingering uncertainty around global growth and energy markets, analysts suggested that gold could remain supported in the near term as investors seek refuge from volatility.
Other metals - Precious metals beyond gold also advanced: silver rose 1.4% to $84.72 per ounce, and platinum gained 1.6% to $2,196.60 an ounce.
Key points
- Gold rose 0.8% to $5,179.60/oz in Asian trade; U.S. Gold Futures were at $5,188.29.
- Escalating Middle East tensions and an easing U.S. dollar have increased demand for safe-haven assets, supporting bullion.
- Other precious metals climbed: silver to $84.72/oz and platinum to $2,196.60/oz.
Risks and uncertainties
- Continued regional escalation could sustain risk aversion, affecting equities and other risk-sensitive sectors.
- Ongoing volatility in energy markets tied to the conflict could have knock-on effects for growth expectations and commodity markets.
- Dollar volatility remains a source of price fluctuation for dollar-denominated commodities.