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Gold prices traded largely flat on Thursday, giving up earlier gains as the U.S. dollar rebounded, while ongoing conflict in the Middle East continued to support safe-haven demand for the precious metal.
By 01:31 ET (06:31 GMT), spot gold was little changed at $5,142.98 per ounce, after climbing nearly 1% earlier in the session to $5,195.41. Meanwhile, U.S. gold futures edged 0.3% higher to $5,149.75 per ounce.
Gold had risen about 1% in the previous session, recovering from a nearly 5% drop on Tuesday when a stronger dollar pressured prices.
Middle East conflict supports safe-haven demand
Geopolitical tensions escalated further after the United States sank an Iranian warship in international waters, while Iran continued launching missiles across several countries in the region and reportedly targeted key energy infrastructure.
The intensifying conflict has heightened fears of a broader regional war, prompting investors to reduce exposure to riskier assets and seek safety in gold, traditionally viewed as a hedge during periods of geopolitical uncertainty and market volatility.
Adding to uncertainty, Tehran rejected reports that its intelligence ministry had reached out to Washington to negotiate an end to the conflict, calling the claims “pure falsehood.”
Analysts at ING noted that the conflict’s potential impact on inflation could complicate the outlook for gold.
“The inflationary effects of the Middle East conflict, particularly through sharply higher energy prices, could strengthen expectations that interest rates will remain higher for longer — a headwind for non-yielding assets such as gold,” the bank said in a research note.
However, ING added that persistent geopolitical uncertainty continues to create a risk premium, helping support gold prices despite the challenging interest rate environment.
Dollar rebound limits upside
The U.S. Dollar Index rose 0.4% during Asian trading hours, recovering after a modest 0.3% decline overnight. The dollar had already posted strong gains earlier in the week.
A stronger dollar tends to weigh on gold because it makes the metal more expensive for investors using other currencies.
In a separate development, U.S. President Donald Trump nominated Kevin Warsh as the next Chair of the Federal Reserve, a move markets interpret as potentially supportive of future interest rate cuts.
Other metals decline
Other precious metals turned lower after early gains.
- Silver fell 2% to $81.97 per ounce
- Platinum dropped 1.2% to $2,137.60 per ounce
Both metals had risen more than 2% earlier in the session before reversing course.
In industrial metals, London Metal Exchange copper futures slipped 1% to $12,941.33 per ton, while U.S. copper futures also declined 1% to $5.84 per pound.
With geopolitical tensions high and currency markets volatile, gold remains caught between safe-haven demand and the pressure of a stronger U.S. dollar.
