Gold prices saw a notable rise on Thursday, driven by a combination of rising geopolitical risks in the Middle East and a weakening U.S. dollar. Spot gold gained 0.6%, reaching $3,373.09 per ounce by 0552 GMT. U.S. gold futures saw a larger rise, climbing 1.5% to $3,393.80.
The dollar’s decline added pressure, falling to a two-month low. This shift made gold, priced in U.S. dollars, more attractive to international buyers. As the dollar weakened, gold became a safer asset to hold.
Market analysts suggest that the weakness of the dollar served as a key catalyst. Kelvin Wong, a senior market analyst at OANDA in Asia Pacific, pointed out that a “bullish breakout” above the $3,346 resistance level encouraged technical buying. As a result, more investors turned to gold, seeing it as a protective asset amid growing uncertainty.
Tensions between the U.S. and Iran also contributed to rising demand for safe-haven assets like gold. On Wednesday, President Donald Trump ordered U.S. personnel to be moved out of the Middle East due to escalating security concerns. This decision highlighted the increasing volatility in the region, which typically pushes investors towards more stable investments like precious metals.
Alongside geopolitical risks, U.S. inflation data also played a role in shaping market sentiment. In May, U.S. consumer prices rose less than anticipated. This data was driven by lower gasoline prices. Despite this, inflation could rise again due to higher import tariffs. The news fueled expectations that the Federal Reserve might implement rate cuts sooner than expected.
Wong emphasized that the current CPI data isn’t alarming, but it could lead the Fed to move more swiftly with rate cuts. Traders now expect the Federal Reserve to cut rates by 50 basis points by the end of the year.
Investors are eagerly awaiting the upcoming U.S. producer price index (PPI) data. Analysts hope it will offer more clarity on the Federal Reserve’s next move. Meanwhile, President Trump mentioned that Washington and Beijing reached an agreement on a framework to restore a fragile truce in the U.S.-China trade war. This deal helped ease concerns over higher tariffs, boosting overall market sentiment.
In addition to gold, other precious metals also saw price changes. Spot silver rose 0.4% to $36.38 per ounce, while platinum climbed 1.2% to $1,271.15. Palladium, however, dropped 1.1% to $1,068.19, continuing to hover near its four-year highs.
The rise in gold prices amid rising Middle East tensions and a weaker dollar highlights the growing importance of geopolitical risks and inflation data in shaping market trends. Investors remain cautious, keeping a close eye on global developments and the Federal Reserve’s actions in the months to come.
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