American gold bars stand on display during a preview of “Gold”, a new exhibition dedicated to the highly prized mineral at the American Museum of Natural History in New York, November 15, 2006. The exhibit opens November 18 and runs through August 19 2007. REUTERS
March 4 (Reuters) – Gold prices rose over 1% on Wednesday, rebounding from a more than one-week low hit in the previous session, as escalating U.S.-Israeli air strikes against Iran and heightened geopolitical uncertainty supported safe-haven demand.
Spot gold gained 1.6% to $5,168.69 per ounce as of 0249 GMT. U.S. gold futures for April delivery added 1.1% to $5,178.40.
On Tuesday, bullion fell more than 4% to its lowest since February 20, weighed by a firmer dollar and dimming rate-cut prospects as inflation concerns were intensified by fears of a potentially prolonged Middle East conflict.
“I think for gold to shrug this off over the course of a number of days wouldn’t be surprising because it has tended into its own narrative and has been resilient despite whatever the dollar is doing, despite what yields have been doing since the beginning of last year,” said Ilya Spivak, head of global macro at Tastylive.
Global oil and gas prices surged as the U.S.-Israeli war on Iran halted energy exports from the Middle East, with Tehran attacking ships and energy facilities, closing navigation in the Gulf and forcing production stoppages from Qatar to Iraq.
Global stock markets slid as the disruption of Middle East energy supplies exacerbated investor concerns about inflation.
“Higher oil prices as a result of escalating geopolitical tensions in Iran added to inflationary concerns and complicated the outlook for monetary easing,” said Christopher Wong, a strategist at OCBC.
Investors expect the U.S. Federal Reserve to hold rates at the end of its next two-day meeting on March 18, according to the CME Group’s FedWatch tool.
“The underlying fundamentals (for gold) have not materially shifted. Structural drivers such as geopolitical uncertainty, policy unpredictability and portfolio diversification needs remain intact,” Wong added.
Spot silver advanced 3.5% to $84.92 per ounce on Wednesday, after falling more than 8% in the last session.
Spot platinum added 2.7% to $2,139.56 per ounce, while palladium gained 1.6% to $1,673.87.
Reporting by Noel John in Bengaluru; Editing by Sumana Nandy and Ronojoy Mazumdar
