Gold Prices Rally in International Market Amid Middle East Tensions, Weak US Economic Data

Gold prices surged to their highest level in over a month on Friday, driven by escalating geopolitical tensions in the Middle East and increased investor demand for safe-haven assets.

A combination of Israel’s military strike on Iran, softer US inflation data, and signs of a cooling labor market also fueled expectations of a potential Federal Reserve rate cut, adding further momentum to gold's rally.

Gold Surges as Investors Flock to Safety

Gold prices rose sharply on Friday, with spot gold climbing 1.3% to $3,428.28 per ounce as of early Asian trading hours. This marked the precious metal’s highest level since May 7 and positioned it for a weekly gain of more than 3.5%. US gold futures also advanced by 1.4% to reach $3,449.60.

The rally was primarily fueled by heightened safe-haven demand following Israel’s confirmed strike on Iranian territory. The geopolitical instability has rattled global markets, leading investors to turn to gold, a traditional hedge during times of uncertainty.

Gold Rate Uptick Amid Rising Tensions in the Middle East

The situation in the Middle East escalated rapidly after Israel launched a military strike on Iran, citing concerns over Iran’s alleged efforts to produce nuclear weapons. Following the attack, Israel declared a state of emergency, anticipating retaliatory missile and drone attacks from Tehran, as per a Reuters report.

These developments have spooked global investors, pushing them towards gold and other low-risk assets.

Weak US Economic Data Adds to Gold's Momentum

Aside from geopolitical risks, gold is also benefiting from subdued US economic indicators. Recent data pointed to a cooling labour market and muted inflation, bolstering expectations that the US Federal Reserve might cut interest rates sooner than expected.

Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors.

Other Precious Metals: Mixed Movements

In contrast to gold’s surge, other precious metals showed mixed performance:

• Silver edged down by 0.1% to $36.33 per ounce.
• Platinum dropped 0.8% to $1,285.21.
• Palladium remained flat at $1,055.21.

Despite the minor fluctuations, all three metals were still on track for weekly gains, indicating broader investor interest in the precious metals space amid growing global uncertainties.

Read More: RBI Foreign Exchange Reserves: Gold Holdings Rise 26% Since FY21.

Conclusion

With Middle East tensions intensifying and US economic indicators turning softer, gold has reclaimed its role as a preferred safe-haven asset. The rally reflects a combination of geopolitical anxiety and shifting expectations about future monetary policy in the US.

As the situation unfolds, market participants will closely monitor both developments in the Middle East and Fed policy signals for further direction.

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