Gold rises as escalating conflict in Middle East stokes demand

Gold has rallied by nearly a quarter this year, with demand supported by persistent geopolitical and trade tensions as well as concerns about the Fed’s independence.

• Gold rises for 5th day amid Middle East conflict, inflation fears
• Bullion climbed over 3% in five sessions, topping $5,360 an ounce
• Gold's safe-haven appeal boosted by rising energy prices, Fed outlook

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Gold rose for a fifth day, as the escalating war in the Middle East upended global energy markets and drove investors to safer assets.

Bullion climbed as much as 0.8% to top $5,360 an ounce, having added more than 3% over the previous four sessions, as the conflict reverberated across the region. President Donald Trump said the US would continue its military offensive for as long as it takes, and Israel announced a “wave of strikes” targeting Iran’s command centers. Tehran has attacked oil and gas infrastructure and threatened shipping in the strategic Strait of Hormuz.

The resulting spike in energy prices has stoked inflation fears in the US, causing Treasuries to slump and raising the likelihood that the Federal Reserve will leave interest rates unchanged for longer. Traders are now pricing in a rate cut by September, later than previously estimated. While higher rates may weigh on gold as it doesn’t pay interest, they can also reinforce bullion’s role as a better store of value.

Even before the US-Israeli attacks on Iran over the weekend, there were signs that US inflation was set to rise. Manufacturing input prices soared in February at the fastest pace since 2022, according to a gauge from the Institute for Supply Management. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon warned that inflation could become a “skunk at a party” for the US economy.

Gold has rallied by nearly a quarter this year, with demand supported by persistent geopolitical and trade tensions as well as concerns about the Fed’s independence. The revival of a broader retreat from bonds and currencies, known as the debasement trade, has added fresh impetus to a multiyear rally. The metal hit a record high above $5,595 an ounce at the end of January.

Spot gold rose 0.6% to $5,354.32 an ounce as of 8:50 a.m. in Singapore. Silver added 1.9% to $91.11, after ending Monday 4.7% lower. 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.