Gold prices moved higher in Asian trading on Wednesday, recovering part of the steep losses recorded in the previous session as investors reconsidered demand for safe-haven assets amid escalating tensions between the United States and Iran and a surge in the U.S. dollar.
Spot gold rose 1.2% to $5,150.63 per ounce as of 01:45 ET (06:45 GMT), while U.S. gold futures gained 0.8% to $5,166.40.
The precious metal had fallen 4.5% on Tuesday, pressured by a stronger dollar and rising U.S. Treasury yields.
Stronger dollar caps gains for gold
The US Dollar Index was broadly unchanged after climbing nearly 1.5% over the previous two sessions, reaching a six-week high overnight as investors sought safety and scaled back expectations for Federal Reserve rate cuts in the near term.
A firmer dollar typically weighs on gold by making it more expensive for buyers using other currencies, which tends to reduce global demand.
At the same time, continued geopolitical tension in the Middle East helped underpin bullion prices. The conflict between the U.S. and Iran intensified after coordinated American strikes on targets linked to Tehran triggered threats of retaliation from Iranian officials, raising concerns about wider regional instability.
Investors are increasingly worried that the confrontation could disrupt energy supplies and potentially draw additional regional powers into the conflict.
Higher oil prices complicate central bank outlook
Oil prices remained elevated as markets weighed the risk of supply disruptions, particularly along major shipping routes in the Gulf region. Rising crude prices have added to inflation concerns, complicating the outlook for central banks around the world.
Analysts said gold is currently being influenced by opposing forces: demand for safe-haven assets driven by geopolitical uncertainty, and macroeconomic pressure from a stronger dollar and higher bond yields.
Among other precious metals, silver prices rose 3% to $84.44 per ounce after falling more than 8% in the previous session.
Platinum increased 2.8% to $2,148.50 per ounce after plunging about 10% on Tuesday.
Benchmark copper futures on the London Metal Exchange edged up 0.8% to $13,049.33 per ton, while U.S. copper futures rose 1.1% to $5.89 per pound.
In China, official PMI data showed manufacturing activity remaining in contraction territory, while private surveys from RatingDog PMI indicated stronger-than-expected expansion, highlighting mixed signals about the pace of the country’s economic activity.