Gold Rises Amid Fears of Iran War's Impact on US Inflation

SadaNews - Gold has risen for the fifth consecutive day as the escalating war in the Middle East has disrupted global energy markets, driving investors toward safer assets.

The precious metal climbed by up to 0.8% to surpass $5,360 per ounce, after adding more than 3% during the previous four sessions, as the conflict resonates throughout the region.

President Donald Trump stated that the United States will continue its military attack for as long as necessary, and Israel announced a "wave of strikes" targeting Iranian command centers. Tehran has attacked oil and gas infrastructure and threatened shipping in the strategic Strait of Hormuz.

Impact of Rising Energy Prices on the US Economy

The resulting rise in energy prices has fueled inflation fears in the United States, causing Treasury bonds to decline and increasing the likelihood that the Federal Reserve will keep interest rates unchanged for a longer period.

Traders are now pricing in a rate cut by September, later than previously expected. While rising prices may pressure gold since it does not pay interest, they could also enhance the precious metal's role as the best store of value.

Even before the US and Israeli attacks on Iran over the weekend, there were signs that inflation in the United States was on the verge of rising.

Manufacturing input prices soared in February at the fastest pace since 2022, according to a gauge from the "Institute for Supply Management." Jamie Dimon, the CEO of JPMorgan Chase & Co, warned that inflation could become a "major obstacle" to the US economy.

Performance of Gold and Other Metals

Gold has risen nearly a quarter of its value this year, supported by ongoing geopolitical and trade tensions, as well as concerns about the Federal Reserve's independence.

The revival of the broader withdrawal from bonds and currencies, known as "devaluation trade," has provided a new boost to the multi-year rise of the precious metal. Gold reached a record level above $5,595 per ounce at the end of January.

Spot gold rose by 0.6% to $5,354.32 per ounce as of 8:50 AM in Singapore. Silver added 1.9% to $91.11, after ending Monday with a decline of 4.7%.

Platinum and palladium also advanced. The Bloomberg spot dollar index, which measures the US currency, was stable after finishing the previous session up 0.7%.