Bullion has been trading up and down for an eighth day at $5,100 even as the US dollar continues to strengthen and market players are now evaluating the important US Consumer Price Index (PCE) data to be published later today (Friday).
At 8.50 am, gold prices were at $5,111, up 0.65% since it opened in early trading on Friday in the Asian session.
Iran's new supreme leader, Mojtaba Khamenei, said that the Strait of Hormuz should remain closed and that Iran would continue to attack its neighbors in the Persian Gulf, according to a Bloomberg report.
The statement came as tensions in the Middle East escalated after a prolonged conflict involving Iran, the United States and regional allies.
US President Donald Trump criticized Iran for describing it as a country of terror and hatred, while warning that the situation in the region was evolving very quickly even though Washington maintained its stance that US military involvement was limited.
Global financial markets are closely monitoring developments in the Middle East. Any signs of prolonged conflict could boost demand for traditional safe-haven assets like gold in the near term.
At the same time, however, the ongoing war has also raised concerns about higher inflationary pressures in the United States. This inflation risk could influence the Federal Reserve’s monetary policy decisions.
If inflation remains high, the US central bank is likely to keep interest rates high for an extended period.
A high-interest rate environment typically increases the attractiveness of yielding assets like government bonds over non-yielding precious metals like gold.
