Gold prices edged higher on Thursday as the widening Middle East conflict drove investors toward the safe-haven asset, though a rebound in the dollar limited gains. Spot gold rose 0.4% to $5 153.11 per ounce, while U.S. gold futures for April delivery gained 0.5% to $5 161.30.
The conflict escalated sharply on Wednesday after a U.S. submarine sank an Iranian warship off Sri Lanka, killing at least 80 people, and NATO air defences destroyed an Iranian ballistic missile fired toward Turkey. The escalation came as the son of Iran's slain supreme leader Ayatollah Ali Khamenei emerged as a frontrunner to succeed him, suggesting Tehran was not about to buckle under pressure, five days after the U.S. and Israel launched a military campaign that has killed hundreds and convulsed global markets.
"I think this crisis is something that supports gold prices in the long run. But the uncertainty surrounding the war means we will continue to see heightened volatility until we see signs that we've reached peak escalation," said Kyle Rodda, senior financial market analyst at Capital.com.
Bullion, traditionally viewed as a safe-haven asset, has risen about 20% so far this year, notching successive record highs amid heightened global political and economic uncertainty.
Capping gains was a rebound in the dollar from the previous session's losses, making greenback-priced bullion more expensive for holders of other currencies.
In U.S. political developments, President Donald Trump officially nominated former Federal Reserve Governor Kevin Warsh to be the central bank's next chair, moving closer to installing an interest-rate-cut-friendly Fed chief. Markets expect the Fed to keep rates steady on 18 March, according to CME Group's FedWatch tool.
Investors now await weekly U.S. jobless claims data due later Thursday and the February employment report on Friday.
Among other precious metals, spot silver fell 1.5% to $82.20 per ounce, platinum dropped 0.5% to $2 138.11, and palladium lost 1.2% to $1 654.08.
Market Sentiment:
The sentiment is cautiously bullish for gold, with geopolitical risk firmly back in focus. The direct U.S.-Iran naval engagement and the succession dynamic in Tehran suggest this conflict has legs, removing any expectation of quick de-escalation. Gold's 20% year-to-date gain and record-breaking streak reflect sustained institutional and retail demand for protection. The dollar's rebound is a temporary headwind but unlikely to derail the broader trend while conflict risks persist. Silver's underperformance — down even as gold rises — reflects its dual nature as both precious and industrial metal, with growth concerns weighing on it. The Warsh nomination adds another layer: a Fed chair perceived as more willing to cut rates would be gold-positive, though confirmation is not immediate. For now, gold remains the cleanest hedge against Middle East escalation, and any pullback will likely attract buyers. The key variable is whether this becomes a prolonged conflict or whether diplomatic off-ramps emerge. Until then, volatility will remain elevated, with the bias to the upside.
Disclaimer:
This content has been generated using AI technology and is intended for informational purposes only. While efforts have been made to ensure accuracy and relevance, this text should not be considered professional advice or an official statement. Always verify information from authoritative sources before making any decisions. This is not financial advice.
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