Gold prices rose slightly on Thursday as the escalating conflict in the Middle East sent investors into safe-haven assets, but gains were limited by a rebound in the dollar.
As of 0638 GMT, spot gold was up 0.4% at $5,153.11 an ounce. U.S. gold futures for April delivery rose 0.5% to $5,161.30.
“We think this crisis will support gold prices in the long term, but the uncertainty surrounding the war means that volatility will continue until we see signs of peak escalation,” said Kyle Rodda, senior financial markets analyst at Capital.com.
The dollar rebounded from the previous session’s decline, making dollar-priced bullion expensive for holders of other currencies. The war escalated sharply on Wednesday after a US submarine sank an Iranian warship off the coast of Sri Lanka, killing at least 80 people, and an Iranian ballistic missile fired at Turkey was destroyed by NATO air defenses. The escalation comes as the son of slain Iranian supreme leader Ayatollah Ali Khamenei has emerged as the front-runner to succeed him, signaling that Iran will not bow to pressure five days after the United States and Israel launched a military operation that killed hundreds of people and disrupted global markets.
Bullion, traditionally considered a safe-haven asset, has risen about 20% since the beginning of the year, hitting a new record high amid heightened global political and economic uncertainty. Meanwhile, US President Donald Trump has officially nominated former Federal Reserve President Kevin Warsh to be the next chairman of the US central bank, moving the president one step closer to appointing a Fed chief who favors interest rate cuts.
The market expects the Fed to keep interest rates unchanged on March 18, according to CME Group’s FedWatch tool.
Investors are now awaiting the release of weekly U.S. jobless claims numbers later in the day and February U.S. jobs data on Friday.
Spot silver fell 1.5% to $82.20 an ounce. Platinum fell 0.5% to $2,138.11, and palladium fell 1.2% to $1,654.08.
