Gold prices surged to $5,190 per ounce on Thursday, driven by increased demand for safe-haven assets as the Middle East conflict between the United States and Iran enters its sixth day. The escalation in hostilities, including U.S. and Israeli military strikes on Iranian territory and retaliatory Iranian missile and drone attacks across the region, has raised fears of a prolonged conflict, pushing investors toward gold as a hedge against geopolitical uncertainty.

Escalating Hostilities and Diplomatic Signals

A U.S. submarine reportedly sank an Iranian warship off the coast of Sri Lanka, marking a significant escalation in the conflict. U.S. Defense Secretary Pete Hegseth described the attack as the first on an enemy vessel since World War II. The ongoing campaign has fueled fears of a protracted war, with the conflict’s duration and economic consequences remaining unclear.

Reuters cited The New York Times reporting that Iran’s Ministry of Intelligence had signaled a willingness to engage in talks with the U.S. Central Intelligence Agency (CIA) to end the war. However, Tehran later denied the report, leaving the situation in flux and raising questions about the potential for de-escalation.

U.S. Tariff Adjustments and Economic Implications

Amid the geopolitical tensions, the U.S. government is set to introduce a temporary 15% global tariff this week, replacing the 10% rate enacted after the Supreme Court invalidated most of former President Donald Trump’s earlier levies. Treasury Secretary Scott Bessent stated that the rate could return to previous levels within five months as new trade probes are conducted.

The temporary tariff adjustment comes as investors weigh the potential for further economic disruptions. Meanwhile, the U.S. 10-year Treasury yield rose to 4.11%, marking its fourth consecutive increase, as markets assess developments in the Iran conflict, tariff updates, and incoming economic data.

Gold’s Technical Outlook and Market Sentiment

Gold’s technical analysis shows a bullish bias, with the price remaining within an ascending channel pattern on the daily chart. The metal has reclaimed the short-term nine-day Exponential Moving Average (EMA), which currently tracks just below the market. Momentum remains positive, with the 14-day Relative Strength Index (RSI) hovering in the mid-50s, indicating steady buying pressure rather than overextended strength.

Gold could explore the upper boundary of the ascending channel at $5,470, followed by the all-time high of $5,598, which was recorded on January 29. On the downside, immediate support lies at the nine-day EMA of $5,163, followed by the lower boundary of the channel at $5,070. A break below the channel would expose the 50-day EMA at $4,874.

Analysts note that while the current structure supports further upside, the rising oil and gas prices have rekindled inflation fears, prompting traders to reconsider expectations for Federal Reserve (Fed) rate cuts. This could potentially cap the upside in non-yielding gold, as investors may shift their focus toward yield-bearing assets in a higher inflation environment.

Gold’s rise reflects broader concerns about economic stability and the potential for a prolonged Middle East conflict. The weakening U.S. dollar has also contributed to the increase, as a weaker dollar makes gold cheaper for buyers using foreign currencies, further boosting demand.