Gold prices rebounded as the USD weakened, amid the Middle East conflict entering its sixth day without signs of cooling down.
The precious metal at one point increased by 0.9%, surpassing the 5-180 USD/ounce mark after increasing by about 1% in the previous session. Investors turned to safer assets as US and Israeli forces continued to airstrike Iran, while Tehran launched missiles into many countries in the region, attacking important energy facilities and causing the strategic transportation route through the Strait of Hormuz to be almost paralyzed.
US President Donald Trump expressed confidence in Washington's military campaign, and said that US forces had sunk an Iranian warship in international waters. Meanwhile, Tehran denied information that the US Department of Intelligence contacted Washington to negotiate an end to the conflict, calling it "completely fabricated".
As the conflict drags on and energy prices rise sharply, global trade may face another shock as the US prepares to impose higher import tariffs. US Treasury Secretary Scott Bessent said that Mr. Trump's plan to raise the common tariff from 10% to 15% is likely to be implemented this week. The European Union is expected to be exempt from this tax increase.
Since the beginning of the year, gold prices have increased by about 20%, supported by increased geopolitical and trade tensions, along with concerns related to the independence of the US Federal Reserve (Fed). This precious metal once set a historical record of over 5,595 USD/ounce at the end of January.
Gold's upward momentum was also supported when the USD recorded its strongest decline in nearly three weeks. Rising oil prices and stock markets put pressure on the greenback. As the USD weakens, gold becomes cheaper for most buyers around the world. An index measuring the strength of the USD has fallen by about 0.4% in the past two days, although still up nearly 1% overall for the week.
Previously, the upward momentum of the USD at the beginning of the week along with a wave of sell-offs in the stock market caused the precious metal to fall sharply in just one session on Tuesday. Since then, according to Ms. Rhona O'Connell, Market Analyst at StoneX Financial, the gold and silver markets have almost no longer had major speculative pressure after many investors closed their previous overbought positions.
As of 9:23 am in Singapore, spot gold prices increased by 0.7% to $5,176.83/ounce. Silver prices increased by 1.5% to $84.79/ounce, following a nearly 2% increase in Wednesday's session. Platinum and palladium also recorded increases.
