Gold resumed its rapid rise as rising tensions in the Middle East offset concerns that the US Federal Reserve will cut interest rates less than expected this year.
The United States and its allies are expecting a major missile or drone strike by Iran or its proxies on military and government targets in Israel, marking a major escalation in the six-month-old conflict, according to people familiar with the intelligence. The price of the yellow metal typically rises during periods of heightened geopolitical risk as investors seek safe haven assets.
Gold posted its biggest drop in nearly a month on Wednesday after U.S. inflation data came in better than expected, prompting traders to scale back expectations for interest rate cuts this year. The yield on U.S. Treasury bonds topped 4.5% after the report, a typically negative sentiment for non-interest-bearing precious metals.
Still, prices remain near the record highs reached on Tuesday, supported by increased central bank buying. The yellow metal’s roughly 20% rally since mid-February is expected to lead to further gains, fund managers whose strategies focus on market movements triggered by political and economic events told Bloomberg, predicting continued momentum.
Spot gold rose 0.3% to $2,341.58 an ounce at 9:54 a.m. in Singapore. The Bloomberg Dollar Spot Index was little changed, remaining near its highest since November. Silver was steady after hitting a three-year high. Platinum and palladium were higher.
