Asia stocks climb tracking Wall St rally; Nikkei hits record high, China GDP beats
By Ashitha Shivaprasad
March 12 (Reuters) - Gold prices fell more than 1% on Thursday, pressured by a stronger dollar and diminishing hopes for a reduction in borrowing costs as the ongoing Iran war stoked inflation concerns.
Spot gold dipped 1.1% at $5,118.16 per ounce by 1:31 p.m. ET (1731 GMT). U.S. gold futures for April delivery settled 1% lower at $5,125.80.
The dollar gained for a third consecutive session. The greenback is a competitive safe-haven asset, and a stronger U.S. currency makes gold more expensive for holders of other currencies. [USD/][US/]
"The higher dollar index, rising treasury yields and lack of interest-rate cuts are the negative factors, but the conflict in the Middle East has been generating some safe-haven flows," said Phillip Streible, chief market strategist at Blue Line Futures.
Two tankers were ablaze in Iraqi waters in an apparent escalation in Iranian attacks that have cut off Middle East energy supplies. In reaction, oil prices rose sharply for the day. [O/R]
Iran will avenge the blood of its martyrs, keep the Strait of Hormuz closed and attack U.S. bases, new Supreme Leader Ayatollah Mojtaba Khamenei said.
Higher crude prices feed into inflation by raising transportation and production costs. Gold is considered an inflation hedge, but high interest rates weigh on it by making yield-bearing assets more attractive.
"If they can prevent oil prices from climbing further, gold should be in a good place... On the bullish side for gold, the main argument is that central bank buying and steady exchange‑traded fund inflows, which have remained positive all year," Streible added.
Chile’s central bank issued its first major gold purchase since at least 2000. In February, the bank boosted its gold reserves to $1.108 billion, up from $42 million in January, equivalent to 2.2% of total reserves.
Elsewhere, spot silver eased 1% to $84.90. Prices gained more than 146% last year.
Analysts at BMI wrote in a note they expect silver to average $93 per ounce in 2026, with strong investment demand consolidating the gains witnessed in 2025, and offsetting price-induced demand destruction in solar panels and jewellery.
Spot platinum lost 1.1% to $2,145.75, and palladium fell 1% to $1,620.86.
