Brief Gold Market Overview

The rise in gold prices was primarily driven by a weaker U.S. dollar and increased technical and dip-buying activity. The U.S. dollar index weakened during the session, making gold, which is priced in U.S. dollars, more affordable for buyers using other currencies. This encouraged demand for the metal and, together with technical buying, strengthened bullish momentum and pushed gold prices higher.

At the same time, escalating tensions in the Middle East and disruptions to regional oil supplies created countervailing pressure on gold. Threats from Yemen's Iran-aligned Houthis forced four tankers carrying Saudi crude to Asia to reverse course in the Red Sea, raising concerns about disruptions to Gulf oil supplies. As a result, oil prices increased by 4.09%, closing at $91.60 per barrel.

The rise in oil prices raised concerns about persistent inflationary pressures, which increased expectations that the Federal Reserve could keep interest rates higher for longer. Higher interest rates increase the opportunity cost of holding non-yielding assets such as gold, putting downward pressure on gold prices.

However, the weaker U.S. dollar and strong technical buying outweighed these negative factors, allowing gold to rise by $70 during the trading session.