Gold advances as Middle East war stokes demand for safer assets

Gold pushed higher, as the war in the Middle East entered a sixth day with no sign of resolution, spurring demand for safer assets.

Bullion rose as much as 1.1 percent to near $5,200 an ounce, before paring some gains as the dollar reversed earlier losses. US and Israeli forces continued to bomb Iran, and the Islamic Republic fired missiles into several countries in the Gulf region, attacking critical energy infrastructure and effectively blocking the strategic Strait of Hormuz.

President Donald Trump expressed confidence in the American military campaign and the US sank an Iranian warship off Sri Lanka’s coast. Iran vowed revenge for that attack and earlier dismissed as “pure falsehood” a report that its Ministry of Intelligence had reached out to Washington to negotiate an end to the conflict.

As the war drags on and energy prices spike, global trade could face another shock as Washington prepares to introduce higher import tariffs. Treasury Secretary Scott Bessent said on Wednesday that Trump’s plan to increase a universal 10 percent levy to 15 percent will likely take effect this week. The European Union expects to be exempt from the hike.

Gold has gained about a fifth this year, underpinned by heightened geopolitical and trade tensions as well as concerns about the Federal Reserve’s independence. The metal hit an all-time high above $5,595 an ounce in late January.

Further support came on Wednesday from the dollar’s biggest fall in about three weeks, with rising oil prices and equities putting pressure on the US currency. A weaker greenback supports gold as it makes the metal more affordable for most buyers. A key gauge of the dollar rose 0.2 percent on Thursday, however, recovering some of its losses.

Spot gold rose 0.5 percent to $5,163.40 an ounce as of 3:08 p.m. in Singapore. Silver dropped 0.3 percent to $83.31, after a gain of nearly 2 percent on Wednesday. Platinum advanced, while palladium fell.