On Tuesday, spot gold prices experienced a sharp rise during the U.S. trading session, climbing from around $2,503 per ounce to briefly touch $2,526 per ounce. By the close, gold settled at $2,524.54 per ounce, marking a 0.26% increase for the day.
FXStreet analyst Christian Borjon Valencia highlighted the impact of a weakening U.S. dollar on gold’s ascent. The U.S. Dollar Index saw a notable decline, dropping from a session high of 100.91 to a low of 100.51. This decline was driven by dovish remarks from Federal Reserve Chairman Jerome Powell, who signaled a potential rate cut, stabilizing U.S. Treasury yields and providing a boost to gold.
Valencia also pointed to escalating tensions in the Middle East as another factor contributing to the rise in gold prices. The conflict between Israel and Hezbollah intensified over the weekend, raising fears of a broader regional conflict, which traditionally benefits safe-haven assets like gold.
On Tuesday, the U.S. administration reinforced its military presence in the Middle East, cautioning Iran against retaliating against Israel. Iran’s Deputy Defense Minister responded with strong rhetoric, asserting that while Iran prefers to avoid war, it reserves the right to retaliate against threats and will decide on the timing and scope of any response. 
