Bullion rose as much as 1.1% to surpass $5,380 an ounce, building on gains of more than 3% over the previous four trading days as tensions spread across the region, News.Az reports, citing Bloomberg.
US President Donald Trump said Washington would maintain its military campaign for as long as necessary, while Israel announced a new “wave of strikes” targeting Iran’s command centers. Tehran, in turn, attacked oil and gas infrastructure and threatened maritime traffic in the strategic Strait of Hormuz.
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The surge in energy prices has heightened inflation concerns in the United States, triggering a decline in Treasury bonds and increasing expectations that the Federal Reserve may keep interest rates elevated for longer. Markets are now pricing in a potential rate cut by September, later than earlier forecasts. Although higher rates typically weigh on gold because it yields no interest, they can also strengthen its appeal as a store of value during periods of economic uncertainty.
Even before the weekend’s US-Israeli strikes on Iran, signs were emerging that US inflationary pressures were intensifying. Manufacturing input prices jumped in February at the fastest pace since 2022, according to data from the Institute for Supply Management. Meanwhile, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon cautioned that inflation could become a “skunk at a party” for the US economy.
Gold has surged nearly 25% this year, supported by persistent geopolitical and trade tensions, as well as concerns over the Fed’s independence. A broader retreat from bonds and currencies — often referred to as the “debasement trade” — has added fresh momentum to the metal’s multi-year rally.
Swiss private bank Union Bancaire Privee (UBP SA) said in a note that there is “ample scope” for bullion to challenge the record high above $5,595 an ounce reached at the end of January if the Middle East conflict drags on for several weeks. On Monday, gold closed at its highest level in more than a month.
However, some analysts cautioned that the upward momentum could ease if tensions stabilize. Han Xiao, general manager of Zhishui Investment Management Co., said geopolitical shocks, particularly wars, tend to have an immediate impact that may fade if the situation does not escalate further.
On Tuesday, the American embassy in Riyadh came under drone attack as Iran intensified strikes on Saudi Arabia in retaliation against the US and Israel. President Trump told a news outlet that Washington would respond.
As of 11:51 a.m. in Singapore, spot gold was up 0.8% at $5,366.59 an ounce. Silver rose 0.8% to $90.11 after falling 4.7% in the previous session, while platinum and palladium were little changed. The Bloomberg Dollar Spot Index was flat, following a 0.7% gain in the prior trading session.
