Gold prices gave up earlier gains and traded mostly unchanged on Thursday as the U.S. dollar strengthened following a modest pullback. Despite the dollar’s rebound, ongoing geopolitical tensions in the Middle East continued to support gold’s appeal as a safe-haven asset.
Spot gold was largely flat at $5,142.98 per ounce at 01:31 ET (06:31 GMT), after climbing nearly 1% earlier in the session to reach a high of $5,195.41 per ounce. Meanwhile, U.S. gold futures rose 0.3% to $5,149.75 per ounce.
The precious metal had already gained about 1% in the previous session, recovering after a sharp 5% drop on Tuesday, when a stronger U.S. dollar weighed heavily on gold prices.
Rising Middle East tensions support gold demand
Geopolitical risks increased after the United States sank an Iranian warship in international waters, escalating tensions across the region. Iran has reportedly launched missiles targeting several countries and critical energy infrastructure in the Middle East.
The growing conflict has raised concerns about a prolonged regional war, leading investors to reduce exposure to riskier assets and turn to gold, which is widely regarded as a safe-haven investment during geopolitical crises and market volatility.
Adding further uncertainty, Iranian officials dismissed as “pure falsehood” reports claiming that the country’s intelligence ministry had contacted Washington in an attempt to negotiate an end to the conflict.
Analysts at ING noted that the surge in energy prices caused by the Middle East conflict could increase inflationary pressures, potentially forcing central banks to keep interest rates higher for longer. Such a scenario can weigh on non-yielding assets like gold.
However, the analysts also emphasized that heightened geopolitical uncertainty continues to support gold prices, as investors maintain a risk premium in the market despite the challenging interest rate environment.
U.S. dollar rebounds and pressures gold
The U.S. Dollar Index rose 0.4% during Asian trading hours after falling about 0.3% overnight. The index had already posted two strong gains earlier in the week.
A stronger dollar typically puts pressure on gold prices because it makes the metal more expensive for investors holding other currencies.
In political developments, President Donald Trump formally nominated Kevin Warsh as the next Chair of the Federal Reserve, a decision that markets interpret as potentially supportive of future interest rate cuts.
Other metals and copper decline
Other precious metals moved lower during the session. Silver prices fell 2% to $81.97 per ounce, while platinum declined 1.2% to $2,137.60 per ounce, after both metals had earlier risen more than 2%.
In the industrial metals market, benchmark copper futures on the London Metal Exchange dropped 1% to $12,941.33 per ton, while U.S. copper futures also fell 1% to $5.84 per pound.
