Gold prices rose in Asian trading on Thursday as escalating conflict in the Middle East drove investors toward safe-haven assets, while a weaker US dollar provided additional support for the precious metal.
Spot gold rose 0.8% to $5,179.60 an ounce by 5:09 a.m. Saudi time. U.S. gold futures fell 0.3% to $5,188.29.
The yellow metal had risen by 1% in the previous session. This increase followed a decline of about 5% on Tuesday when a stronger dollar weighed on prices.
Tensions escalate in the Middle East; US sinks Iranian warship
Geopolitical tensions escalated after the United States sank an Iranian warship in international waters. Iran continued launching missiles at several countries in the region, apparently targeting critical energy infrastructure.
The conflict has deepened fears of a sustained regional war, prompting investors to reduce exposure to risk-sensitive assets and turn to gold, which is traditionally seen as a safe haven against geopolitical instability and market turmoil.
Adding to the uncertainty, Tehran dismissed as “pure lies” a report that its intelligence ministry had contacted Washington to negotiate an end to the conflict.
The dollar fell after a strong rise.
The US dollar index traded steadily after falling 0.3% overnight. It had posted two consecutive sessions of strong gains at the start of the week.
A weak US dollar makes gold more attractive to holders of other currencies.
In other developments, President Donald Trump formally nominated Kevin Warsh as the next chairman of the Federal Reserve, a move seen by markets as supportive of lower interest rates.
With no signs of the conflict in the Middle East abating and uncertainty surrounding global growth and energy markets persisting, analysts said gold could remain supported in the near term as investors continue to seek refuge from volatility.
Among other precious metals, silver prices rose 1.4% to $84.72 an ounce, while platinum rose 1.6% to $2,196.60 an ounce.
