Gold prices rose for a second consecutive session during Wednesday's Asian trade, climbing to a two-week high as escalating conflict in the Middle East boosted demand for safe-haven assets, while the United States dollar index paused after four straight sessions of gains.
By 4:30 pm AEST (6:30 am GMT), spot gold was up 1% at US$4,116.59 an ounce.
Investor sentiment remained cautious after the U.S. Central Command (CENTCOM) confirmed it had completed an 11th consecutive night of strikes on Iran, targeting aircraft hangars and drone storage facilities.
Adding to geopolitical tensions, President Donald Trump warned that U.S. strikes would intensify and target any site where Iran attempts to rebuild its nuclear programme.
Iran continued retaliatory attacks across the Gulf, targeting U.S. military assets in Bahrain, Kuwait and Jordan.
Tehran also said its forces struck two oil tankers attempting to transit the Strait of Hormuz, while Yemen's Iran-aligned Houthi movement opened a new front in the conflict by declaring a naval blockade of Saudi Arabia.
The latest escalation has heightened fears of a broader regional conflict and raised concerns over further disruptions to global energy supplies following the closure of the Strait of Hormuz.
The prospect of tighter oil supplies pushed crude prices to their highest levels since 12 June, increasing concerns that higher energy costs could reignite inflationary pressures.
Persistent inflation risks may encourage the U.S. Federal Reserve to maintain its hawkish monetary policy stance for longer.
According to the CME Group FedWatch Tool, traders are currently pricing in an 86% probability that the Federal Reserve will raise interest rates at least once before the end of the year.
