Gold Rises as Dollar Weakens Amid Middle East Tensions

SadaNews - Gold rose after the dollar weakened and the war in the Middle East entered its sixth day with no signs of resolution.

The precious metal increased by as much as 0.9% to reach $5,180 per ounce, following a gain of 1% in the previous session.

Investors were seeking safer assets as U.S. and Israeli forces continued to bomb Iran, with Iran launching missiles at several countries in the region, targeting vital energy infrastructure, and the strategic Strait of Hormuz was almost completely closed.

U.S. President Donald Trump expressed confidence in the U.S. military campaign, and the United States sank an Iranian warship in international waters. Tehran rejected a report stating that its intelligence ministry had contacted Washington to negotiate an end to the conflict, describing it as "pure lies."

Trump's Anticipated Tariff Shock

As the war continues and energy prices rise, global trade may face another shock as Washington prepares to impose higher tariffs.

Treasury Secretary Scott Pessent said on Wednesday that Trump's plan to increase the overall tax by 10% to 15% is likely to go into effect this week. The European Union expects to be exempted from this increase.

Gold has risen nearly a fifth this year, supported by escalating geopolitical and trade tensions, as well as concerns about the independence of the Federal Reserve. The metal reached an all-time high above $5,595 per ounce in late January.

Additional support came on Wednesday from the largest drop in the dollar in about three weeks, with rising oil and stock prices putting pressure on the U.S. currency. A weaker dollar supports gold as it makes the metal more expensive for most buyers. A key dollar index fell about 0.4% in the last two days, although it has still risen about 1% this week.

Market Volatility and Its Impact on Precious Metals

The strength of the dollar earlier in the week, combined with widespread selling in stock markets, led to a sharp one-day drop in precious metals on Tuesday.

Since then, gold and silver prices have faced "a bit of speculative burden" as investors have liquidated excessive long positions, noted Rona O'Connell, head of market analysis at StoneX Financial Ltd., in a memo.

Spot gold rose by 0.7% to $5,176.83 per ounce by 9:23 AM in Singapore. Silver added 1.5% to reach $84.79, extending gains of about 2% on Wednesday. Platinum and palladium also advanced.