Gold prices rose 2% on Wednesday, rebounding from more than a week’s low in the previous session as the dollar took a lull and escalating tensions in the Middle East boosted demand for the yellow metal as a safe haven.
Spot gold rose 1.8% to $5,175.39 an ounce by 9:25 p.m. Japan time. US gold futures for April delivery rose 1.2% to $5,186.90.
The US dollar fell by 0.1%, making greenback-priced gold more affordable for buyers using other currencies.
“After the unwinding of positions and the dollar’s strength over the past few days, the market has returned to a more typical macro risk-off stance and silver is also rising,” said Jamie Datta, market analyst at Nemo Money.
“The safe-haven properties of gold and silver are likely to shine again,” Dutta added.
Gold fell more than 4% on Tuesday as investors flooded into the dollar and inflation concerns dampened bets on interest rate cuts, potentially lowering the opportunity cost of holding gold.
Meanwhile, spot silver rose 4.5% to $85.74 an ounce on Wednesday, after falling more than 8% in the previous session.
The US military continued its round-the-clock assault on Iran, and Israel on Wednesday launched a “wide-ranging” offensive targeting Iran’s missile bases and air defense systems.
Asian stocks plummeted as investors bet on chip makers en masse on fears that an oil crisis caused by the escalation of war in the Middle East would raise inflation and delay interest rate cuts.
Investors widely expect the U.S. Federal Reserve to keep interest rates unchanged at the end of its next two-day meeting on March 18, according to CME Group’s FedWatch tool.
“Should military operations be prolonged or spread across the region, demand for safe-haven assets could continue to support gold prices above the $5,000/oz level, opening the door to retesting recent highs,” said Linh Tran, senior market analyst at XS.com.
Among other metals, spot platinum rose 3.7% to $2,159.45 an ounce and palladium rose 3% to $1,697.08.
(Reporting by Pablo Sinha in Bengaluru; Editing by Irene Soren)
