By: Economy Middle east

Gold prices rose on Friday, recovering from a drop of more than 1 percent in the previous session as investors turned to safe-haven assets amid growing uncertainty surrounding the expanding conflict in the Middle East.

As of 5:00 GMT, spot gold gained 0.09 percent to $5,127.9 per ounce, while U.S. gold futures for April delivery rose 1.28 percent to $5,143.5.

Despite the rebound, gold prices have fallen about 3 percent so far this week and are on track to end a four-week winning streak, as reduced expectations for interest rate cuts and rising energy prices have heightened inflation concerns.

In the UAE, gold rates surged, with 24-carat gold rising AED6.5 to AED618 and 22-carat gold gaining AED6 to AED572.25. Additionally, 21-carat gold rose AED6 to AED548.75 and 18-carat gold edged up AED5 to AED470.25.

Meanwhile, 14-carat gold rose AED4 to AED367.

Weaker U.S. dollar supports bullion

The U.S. dollar weakened further, making gold prices cheaper for holders of other currencies. The conflict in the Middle East entered its seventh day on Friday with no clear signs of easing, keeping global financial markets on edge.

On the sixth day of the war, Iran launched a series of attacks on Israel and the region. Fighting between the United States, Israel and Iran has intensified over the past week, with missile strikes and retaliatory attacks spreading across the region and raising concerns about potential disruptions to global energy supplies.

U.S. Defense Secretary Pete Hegseth and Admiral Brad Cooper, who commands U.S. forces in the Middle East, said the United States has sufficient munitions to sustain its bombardment indefinitely. Meanwhile, U.S. President Donald Trump said he wanted a say in choosing Iran’s next leader once the war ends, highlighting growing uncertainty over the region’s political future.

As a result, global energy prices surged as the conflict disrupted supply and shipping routes, leading some major Middle Eastern producers to reduce output. Meanwhile, gold, traditionally seen as a safe-haven asset, has gained around 18 percent so far this year, reaching successive record highs amid heightened geopolitical and economic uncertainty.

“Recent movements in the metal suggest the spike in WTI oil prices has stoked major concerns about a resurgence in inflation. In a week, WTI oil has surged almost 15 percent to $78, and the dollar index has surged by almost 1.4 percent. Traders are now pricing in only a 30 percent chance of a rate cut in June, down from 50 percent a month ago,” said Vijay Valecha, Chief Investment Officer, Century Financial.

Higher oil prices stoke inflation fears among global central banks

The situation has complicated the outlook for global central banks, including the U.S. Federal Reserve. Higher oil prices tend to feed into inflation and could make policymakers more cautious about cutting interest rates in the near term.

“High inflation and a stronger dollar are major headwinds for gold prices as long as the war continues. Extreme risk-aversion sentiment within investors might also lead to a selloff in the metal amid liquidity needs,” added Valecha.

U.S. data released on Thursday showed that initial jobless claims remained unchanged last week, while layoffs declined sharply in February. Investors are now awaiting the U.S. employment report for February, scheduled for release later in the day. The data may offer fresh clues about the strength of the labor market and the future path of monetary policy.

A stronger-than-expected reading could reinforce expectations that the Federal Reserve has room to postpone interest rate cuts.

Gold prices typically benefit from geopolitical uncertainty and lower interest rates, but the metal has struggled to build momentum this week as a stronger dollar and rising bond yields have weighed on its appeal.

Other precious metals

As gold prices rose, the broader precious metals market was up on Friday. Spot silver rose 2.43 percent to $84.16 per ounce. Platinum gained 1.32 percent to $2,149.80, while palladium climbed 1.58 percent to $1,655.50.