By: Creamer media

Gold prices rose on Thursday as escalating tensions in the Middle East pushed investors toward the safe-haven metal. Additional support came from a weaker U.S. dollar, which helped boost prices further.

As of 5:05 GMT, spot gold rose 0.99 percent to $5,174.08 per ounce, while U.S. gold futures for April delivery gained 0.94 percent to reach $5,183.

In the UAE, gold rates marked a notable increase, with 24-carat gold rising AED4 to AED623.25 and 22-carat gold gaining AED3.5 to AED577. Additionally, 21-carat gold rose AED3.5 to AED553.25 and 18-carat gold edged up AED3 to AED474.25.

Meanwhile, 14-carat gold rose AED2.5 to AED370.

U.S. dollar falls from over three-month high

Gold prices rose as the U.S. dollar retreated from a more than three-month high reached earlier in the week, making bullion, which is priced in dollars, cheaper for investors using other currencies.

“Gold is doing what it usually does in times of crisis – trading higher on solid safe-haven demand, though it remains below its record $5602 high. This tepid rally, much like crude oil’s, partly reflects a market already positioned for conflict and betting on a shorter duration,” said Tony Sycamore, Market Analyst, IG.

Meanwhile, tensions between the U.S. and Iran intensified on Wednesday after a U.S. submarine sank an Iranian warship off Sri Lanka, killing at least 80 people. In a separate incident, NATO air defence systems intercepted and destroyed an Iranian ballistic missile launched toward Turkey.

The escalation coincided with the emergence of the influential son of Iran’s supreme leader as a leading contender to succeed him, signaling that Tehran is unlikely to yield to pressure. The development came five days after the United States and Israel began a military campaign that has rattled global markets.

Gold, traditionally regarded as a safe-haven asset, has gained about 20 percent since the start of the year, reaching several record highs amid growing global political and economic uncertainty.

“The performance of gold and silver prices in reaction to the war in the Middle East is very typical. While providing stability to portfolios in times of heightened volatility, the restraint of indirectly involved countries and the limited risk of an oil crisis should cap the upside to prices. We stick to our established views – Constructive on gold and Neutral on silver,” said Julius Baer in a recent market update.

Trump formally nominates Kevin Warsh as next Fed chair

Meanwhile, U.S. President Donald Trump has formally nominated former Federal Reserve Governor Kevin Warsh to serve as the next chair of the U.S. central bank, moving closer to appointing a Fed leader seen as supportive of interest rate cuts, which could boost gold prices further.

According to CME Group’s FedWatch tool, markets expect the Federal Reserve to keep interest rates unchanged at its March 18 meeting.

Investors are now looking ahead to weekly U.S. jobless claims data due later in the day, as well as the February U.S. employment report scheduled for release on Friday.

This week, Fed Bank of Chicago President Austan Goolsbee stated that more rate cuts could materialise this year if inflation drops, while Fed Governor Stephen Miran expressed favour for rates to go down by a full percentage point.

“Gold prices are holding steady below the $5,200 threshold after the U.S. and Iran agreed to continue nuclear negotiations next week. However, the American military has built up its presence in the Middle East to the greatest extent since 2003, creating a risk of flare-up in tensions if talks don’t go well,” said Vijay Valecha, Chief Investment Officer, Century Financial.

“Thus, the precious metal remains well on track to deliver its seventh consecutive monthly gain, marking its longest winning streak since 1973. Trade tariff uncertainty and geopolitical tensions are contributing to bullion’s gains, which are further supported by central bank purchases and ETF inflows at their highest since 2022,” he added.

Other precious metals

As gold prices rose, the precious metals market edged higher. Spot silver gained 1.52 percent to reach $84.67 per ounce. Platinum also advanced, rising 1.75 percent to $2,186.08, while palladium gained 0.57 percent to $1,683.98.

“The real curiosity here is silver. Despite leading gold higher in recent months, it fell 4.74 percent yesterday to finish at $89.34, some $32 (26 percent) below its $121.67 record high. This divergence is worth watching; if silver’s weakness persists, it could eventually act as an anchor, dragging gold prices down with it,” added Sycamore.