Gold firms as dollar rally cools, US-Iran tensions heat up

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Gold rose on Thursday as the U.S. dollar backed away from 2018 highs after weaker-than-forecast U.S. inflation data and as tensions between the United States and Iran also supported the precious metal.

Spot gold rose 0.66 percent at $1,321.11 per ounce by 3:45 p.m. ET. During the session it touched $1,322.76, a 10-day high. U.S. gold futures for June delivery settled up $9.30 at $1,322.30 per ounce.

U.S. President Donald Trump on Tuesday withdrew the United States from an international nuclear accord with Iran, raising the risk of conflict the Middle East and increasing the appeal of safe-haven assets such as gold.

Also helping gold, viewed as a safe-haven investment, was U.S. President Donald Trump's move on Tuesday to withdraw from a nuclear accord with Iran, raising the risk of conflict in the Middle East.

Israel said on Thursday it had attacked nearly all of Iran's military infrastructure in Syria after Tehran fired rockets at Israeli-held territory.

"We've seen a (dollar rally) in the last few weeks, but actually gold hasn't gone down as far as you might think, so political tensions are helping," said Macquarie commodities strategist Matthew Turner.

Turner said the dollar was the main driver for gold and he expects the precious metal to come under pressure in the near term, with the dollar extending its rally.

Risk appetite among investors limited gold's gains. Global equities hit a three-week high as rising oil prices boosted energy companies, offsetting increased political uncertainty.

"It appears as though the investment side of the equation has not attracted a lot of attention," said Rob Lutts, chief investment officer of Cabot Wealth Management. "We are at the lower end of the range. It appears we could drift back up to $1,350, but longer term. We really need to see more investment."

North American gold-backed exchange-traded funds registered inflows in April at their highest level since September 2017, with safe-haven purchases ushered in by a trade stand-off between the United States and China, Syria tensions and worries about possible U.S. sanctions on Russia.

In other precious metals, silver gained 1.55 percent at $16.74, hitting a two-week high. Platinum rose 1.77 percent at $926.10, earlier hitting $926.20, a two-week high. Palladium rose 2.2 percent at $996.25, earlier seeing $1,002.10, a 2-1/2-week high.