Gold prices posted a strong rebound on Thursday, rising nearly 2% as fresh concerns over a possible military escalation between the United States and Iran prompted investors to seek safety in the precious metal, while a softer U.S. dollar provided additional technical support.
Spot gold climbed 1.9% to $4,630.03 per ounce by 1017 GMT, snapping back from its weakest level since March 31 recorded in the previous session. U.S. gold futures for June delivery rose 1.8% to $4,642.90. The move marked a notable shift in sentiment for a metal that has struggled to play its traditional safe-haven role since the outbreak of hostilities in the Middle East.
The immediate catalyst appeared to be reports that President Donald Trump is scheduled to receive a briefing later Thursday on potential plans for a series of targeted military strikes against Iran. That news, first reported by Axios, reignited fears that the conflict could intensify, pushing investors toward assets perceived as stores of value during periods of geopolitical stress.
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Independent gold analyst Ross Norman noted the change in market psychology.
“Certainly some sense of uncertainty in the Middle East is fueling something of a recovery in gold. From the strength of the recovery at the moment, there was also some suggestion that the price seems to have found for now a temporary floor,” he said.
The dollar eased 0.3% against a basket of major currencies, making greenback-priced gold more affordable for overseas buyers and providing a helpful tailwind. A modest retreat in oil prices, which had surged to four-year highs earlier in the week on supply disruption fears linked to the Strait of Hormuz, also eased some inflationary pressure on the metal.
Despite Thursday’s gains, gold remains down about 0.9% for the month and has fallen roughly 12% since the conflict began. This underperformance has puzzled some market observers, given gold’s historical tendency to rally during times of geopolitical uncertainty.
The primary reason for gold’s weakness has been the sharp rise in energy prices. Surging oil costs have stoked fears of higher inflation and raised expectations that central banks, particularly the Federal Reserve, may keep interest rates elevated for longer. Higher rates increase the opportunity cost of holding non-yielding assets like gold, often capping its upside.
Nitesh Shah, commodity strategist at WisdomTree, believes the market is now beginning to price in the geopolitical risk premium more accurately.
“Gold is behaving a bit more like we should expect it to behave,” Shah said. “It should be rising in times of geopolitical risks, and clearly that geopolitical risk is that there’s speculation that the U.S. is getting ready for the next level of escalation.”
The broader macro backdrop remains complex. On Wednesday, outgoing Federal Reserve Chair Jerome Powell concluded his eight-year tenure with the central bank holding interest rates steady. Markets are now turning their attention to the March Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, due later on Thursday at 1230 GMT. Any signs of sticky inflation could further complicate the outlook for monetary policy and weigh on gold in the near term.
Beyond gold, other precious metals also advanced. Silver jumped 3% to $73.60 per ounce, platinum gained 3.3% to $1,941.45, and palladium rose 1.3% to $1,476. Despite Thursday’s gains, all three metals were still heading for their second consecutive monthly decline, reflecting the broader pressure from elevated real yields and a relatively resilient U.S. economy.
Looking ahead, analysts expect several factors to determine whether gold can sustain its recovery. But the immediate focus remains on developments in the Middle East. Any concrete signs of military action or further disruption to oil shipments through the Strait of Hormuz, which handles roughly one-fifth of global oil trade, could drive gold significantly higher. Conversely, any meaningful progress toward de-escalation or a ceasefire would likely trigger profit-taking in the safe-haven trade.
Longer term, gold’s performance is expected to be determined by the interplay between geopolitical risk and monetary policy. If the conflict remains contained and inflation begins to moderate, allowing central banks more room to cut rates, gold could face renewed headwinds. However, if the situation in the Middle East deteriorates or persistent inflation forces the Fed to maintain a restrictive stance, the metal could find strong support.
Thursday’s sharp rebound suggests that after weeks of being overshadowed by inflation concerns, gold’s role as a geopolitical hedge is beginning to reassert itself.