Gold prices advanced in Asian trading on Wednesday, buoyed by heightened geopolitical tensions following reports of a potential Israeli military strike on Iran’s nuclear facilities. The news spurred safe-haven buying, while additional support came from sustained weakness in the U.S. dollar and lingering concerns over U.S. fiscal health.
Spot gold rose 0.4% to $3,302.02 per ounce, while gold futures for June delivery gained 0.6% to $3,303.62 per ounce as of 00:57 ET (04:57 GMT), recovering from last week’s declines and edging closer to record territory.
Geopolitical Risks Fuel Safe-Haven Demand
Gold’s rally accelerated after CNN reported that Israel was preparing for a potential military strike on Iran’s nuclear infrastructure, citing U.S. officials familiar with recent intelligence. Although Israeli leadership has not made a final decision, increased military activity has signaled potential preparations for action.
A strike of this nature could trigger a severe escalation in Middle East tensions, undermining regional stability and risking broader conflict. The development runs counter to Washington’s ongoing diplomatic efforts with Tehran and raises fears of retaliatory measures from Iran, which has previously engaged in tit-for-tat attacks with Israel.
As a result, global investors moved into traditional safe havens, including gold and the Japanese yen, while oil prices also climbed on expectations of potential supply disruptions.
Mixed Moves in Broader Metals Market
Other precious and industrial metals showed a mixed performance:
Silver futures rose 0.2% to $33.255/oz, extending gains from earlier this week.
Platinum futures dipped 1% to $1,050.50/oz, pulling back after recent strength.
On the industrial side, benchmark copper futures on the London Metal Exchange gained 0.4% to $9,559.25 per ton, while U.S. copper futures rose 0.4% to $4.6928 per pound.
Demand for metals remained broadly underpinned by a softer dollar and improved sentiment toward industrial growth.
Weaker Dollar Lends Additional Support
The U.S. dollar continued to retreat following last week’s credit downgrade by Moody’s, which cited mounting federal debt and an increasingly strained fiscal outlook. This downtick in the dollar provided further tailwinds for gold and dollar-denominated commodities.
While several Federal Reserve officials have signaled caution regarding near-term rate cuts, their comments on increasing economic and trade headwinds have added to the pressure on the greenback.
Despite expectations that the Fed will hold rates steady in the near term, markets are still pricing in potential cuts later in 2025, which may further enhance gold’s appeal in a lower-yield environment.
Outlook: Gold Positioned Near Key Resistance
Gold remains firmly above the psychological $3,000/oz threshold and is now trading less than $200 below its all-time high near $3,500 reached earlier this month. With geopolitical risks mounting and macroeconomic uncertainty persisting, investor interest in gold as a hedge remains strong.
Should tensions between Israel and Iran escalate further, bullion could continue its upward trajectory, with short-term resistance expected around $3,347, followed by psychological hurdles at $3,400 and $3,500.
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