Gold Prices Rise as Middle East Tensions Ease

Singapore - The recent pause in Middle East fighting has caused gold prices to rise as the risk of inflationary pressures subsides. After a wave of missile attacks claimed by Tehran-backed Houthis in Yemen on facilities linked to Saudi Aramco, oil prices plummeted but later recovered.

The US halted strikes against Iran without explanation and Iran signalled it was refraining from retaliatory attacks, leading to a decrease in the likelihood of further inflationary pressures. This has been a major concern for investors as renewed fighting in the Middle East had previously stoked inflationary pressures and increased the likelihood that the Federal Reserve may raise interest rates.

Gold prices have largely hovered around US$4,000 an ounce since late June, with dip-buying keeping the metal above the psychological threshold of US$4,000. Bullion rose as much as 1.1 per cent to near US$4,100 an ounce on July 27.