Gold Prices Surge Amid Escalating Middle East Tensions

Gold Prices Surge Amid Escalating War in Middle East

Gold prices rose for a fifth consecutive day, driven by the escalating war in the Middle East and subsequent volatility in global energy markets. Bullion climbed as much as 0.8% to reach $5,360 per ounce, having gained more than 3% over the previous four sessions.

The ongoing conflict has led to a spike in energy prices, fueling inflation fears in the US. As a result, Treasuries have experienced a slump, increasing the likelihood that the Federal Reserve will maintain interest rates unchanged for a longer period. Interest rate traders are now pricing in a rate cut by September, later than previously estimated.

The surge in gold prices comes as the US and Israel continue their military offensive against Iran. President Donald Trump has stated that the US will continue its military efforts for as long as necessary, while Israel has announced a wave of strikes targeting Iran's command centers. Iran has retaliated by attacking oil and gas infrastructure and threatening shipping in the strategic Strait of Hormuz.

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Geopolitical tensions, combined with concerns about the Federal Reserve's independence and trade tensions, have driven gold demand. The revival of a broader retreat from bonds and currencies, known as the debasement trade, has added to the momentum of the multi-year gold rally. Gold prices reached a record high of $5,595 per ounce at the end of January.

As of 8:50 a.m. in Singapore, spot gold rose 0.6% to $5,354.32 per ounce. Silver added 1.9% to $91.11, while platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, was flat after ending the previous session 0.7% higher.