Gold prices up on safe-haven rush, but dollar strength restrains rally

Gold prices rose on Thursday, lifted by safe-haven demand amid an escalating war in West Asia, though a stronger dollar and concerns around the US Federal Reserve’s monetary policy capped gains. 

Spot gold was up 0.5 per cent at $5,166.3 per ounce as of 1800 ist, while US gold futures for April delivery were up 0.7 per cent at $5,168.20. Gold, which hit a record $5,594.82 in January, initially jumped above $5,400 on Monday as the launch of the US-Israeli air war against Iran sparked safe-haven demand, but pulled back from those highs as the dollar also benefited from a flight to safety. 

 

Israel launched another large wave of strikes on Tehran on Thursday, targeting what it said was infrastructure belonging to the Iranian authorities, after Iranian missiles sent millions of Israelis rushing into bomb shelters. 

“... There may be greater safe-haven demand for gold given the ongoing conflict in the Middle East,” said Hamad Hussain, a climate and commodities economist at Capital Economics. “On the other hand, the risk of a prolonged period of higher energy prices that takes rate cuts off the table, and adds to the chance of rate hikes, could be capping further gains,” he said. 

The US dollar rose 0.2 per cent after briefly retreating from three-month highs, as the fallout from the war roiled global markets and kept sentiment fragile.