Gold prices rose in Asian trading on Wednesday after falling nearly 5% in the previous session, as investors reassessed demand for the safe haven amid escalating conflict between the United States and Iran and a sharp rise in the US dollar.
Spot gold rose 1.4% to $5,158.27 an ounce by 04:17 (01:17 GMT). U.S. gold futures climbed 0.8% to $5,166.40.
The yellow metal fell by 4.5% on Tuesday, driven by a stronger dollar and rising US Treasury yields.
The U.S. dollar index rose 0.2% during Asian trading hours after climbing 0.7% to a six-week high overnight, supported by safe-haven demand and reduced expectations of aggressive interest rate cuts by the Federal Reserve in the coming months.
A stronger dollar makes gold more expensive for holders of other currencies, weakening international demand.
Ongoing geopolitical tensions in the Middle East have provided support for gold bullion. The conflict between the United States and Iran escalated after coordinated US strikes on Iranian-linked targets prompted retaliatory threats from Tehran, raising concerns about wider regional instability.
Investors are increasingly concerned that the confrontation could disrupt energy supplies and draw in other regional powers.
Oil prices remained high due to concerns about potential supply disruptions, particularly around key shipping lanes in the Gulf. High crude oil prices have added to inflation worries, complicating the outlook for global central banks and bolstering gold's appeal as a hedge against geopolitical and price risks.
Analysts said the precious metal is currently caught between competing forces: safe-haven flows driven by geopolitical uncertainty and economic headwinds stemming from a strong dollar and high yields.
Among other precious metals, silver prices jumped 1.6% to $83.38 an ounce, while platinum rose 0.3% to $2,124.48 an ounce.
