Dubai gold prices drop as US-Iran tension escalates

Gold prices in Dubai eased slightly on Wednesday morning as escalating tensions between the US and Iran increased concerns over oil prices, inflation and potential interest rate hikes in the United States.

Dubai Gold Prices on Wednesday

The 24K gold price was trading at Dh528.0 per gram in Dubai on Wednesday morning.

Other gold rates opened at:
22K: Dh489.0 per gram
21K: Dh468.75 per gram
18K: Dh401.75 per gram
14K: Dh313.5 per gram
Meanwhile, spot gold declined 0.2 per cent to $4,384 per ounce, while silver remained steady at $66.43 per ounce.

US-Iran Conflict Puts Markets on Edge

Financial markets remained focused on the escalating conflict between the United States and Iran.

On Tuesday, the two sides exchanged strikes in and around the Strait of Hormuz, as well as in US ally Jordan.

US forces reportedly targeted several Iranian oil tankers, prompting Tehran to retaliate with attacks on 10 US ships. Iran also targeted a US base in Jordan, although Jordan confirmed that there were no casualties.

Iran said on Wednesday that it would target oil tankers near Kuwait and Bahrain, both US allies, in retaliation for the strikes on its tankers.

Rising Oil Prices Support Gold

The escalation has pushed oil prices closer to the $100-a-barrel mark, increasing concerns about inflation and global energy supplies.

Brent crude was trading at $99.02 per barrel on Wednesday morning.

Higher oil prices can increase inflation expectations, which could influence the US Federal Reserve's interest-rate decisions and create additional uncertainty for financial markets.

Geopolitical Tensions Keep Gold in Focus

Naeem Aslam, chief investment officer at Zaye Capital Markets, said geopolitical developments remain an important source of support for gold.

He noted that although President Donald Trump said oil prices could fall sharply if the conflict with Iran is resolved in the US's favour, Brent crude remains close to $100 as markets continue to factor in supply and shipping risks.

According to Aslam, elevated oil prices can contribute directly to inflation expectations, while uncertainty surrounding the conflict can increase demand for defensive assets such as gold.

Gold Remains a Safe-Haven Asset

Despite higher bond yields and fears of further interest-rate increases, gold continues to attract investor attention amid geopolitical uncertainty.

With oil prices rising and tensions surrounding shipping through the Strait of Hormuz increasing, market participants will closely monitor developments in the US-Iran conflict and their potential impact on gold prices, inflation and interest rates.