Unafraid of the pressure of a strong US dollar: Middle East conflicts trigger buying at lows, gold prices rebound against the trend.

Notice that the price of gold has risen slightly, recouping some of the losses from the previous trading day, as dip buyers entered this risk-filled market on the fifth day of the Middle East war. As of the time of writing, spot gold rose by 0.95% to $5,137.16 per ounce. Silver rose by 1.8% to $83.46 per ounce, following a drop of over 8% the previous trading day. Platinum and palladium also saw increases. The United States has stated that it will further strike Iran and claimed that the country's military capabilities are "evaporating." Over a dozen countries have been involved in the war, with Tehran targeting Israel and Gulf countries, while Israeli and US forces are bombing targets within Iran. The US military sunk an Iranian warship in international waters. Turkey also came under attack. Meanwhile, the Iranian government denied reports that it had contacted the US to negotiate an end to the conflict, stating that it was "pure fabrication." Thanks to a slight weakening of the US dollar after rising earlier in the week, gold prices rose by 2.3% on Wednesday before giving back some of the gains. Gold poised for the best start in decades Peter Censera, Global Head of Forex Strategy at Rhinebank, stated that significant reductions in gold long positions by hedge funds and fund managers "should limit any downside for gold prices." According to data from the US Commodity Futures Trading Commission, these investors' net long positions in gold are close to their lowest levels in a decade. Gold prices have already risen by about one-fifth this year hitting a historic high of over $5,595 per ounce in late January supported by ongoing geopolitical and trade tensions and concerns about the independence of the Federal Reserve. Censera states, "I am confident we will see a recovery in gold," adding that the long-term driving factors have not changed. "If anything is different, it is that the uncertain outcome of this war has highlighted the ongoing geopolitical risks more than before." However, the inflation risks brought about by the surge in energy prices may force the Federal Reserve and its global counterparts to maintain higher rates for longer periods, even further raising rates, limiting the rise in gold. Traders currently estimate an 80% chance of the Fed cutting rates by more than 25 basis points this year, compared to last Friday when the market fully priced in two rate cuts. Gold is sometimes seen as an inflation hedge, although higher rates that come with rising prices can sometimes suppress gold prices, as seen in 2022. George Cheffley, portfolio manager at asset management firm Ninety One, believes that gold is best described as a hedge for extreme situations. Cheffley explains, "So, if you have high inflation, gold is useful. If you have deflation, gold is useful," "The least favorable scenario for gold is a stable economic environment."