On Thursday gold prices touched the highest level in almost four weeks, after the news that Saudi Arabia launched military operations in Yemen. The greenback extended its slide.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery touched an intraday peak of $1,219.00 a troy ounce, the most since March 2, before trading at $1,211.10 during European morning hours, up $14.10, or 1.17%. Futures were likely to find support at $1,178.60, the low from March 23, and resistance at $1,223.00, the high from March 2. A day earlier, gold tacked on $5.60, or 0.47%, to close at $1,197.00, the sixth consecutive daily gain.
Demand for safe-haven assets was boosted after Saudi Arabia and a coalition of Gulf region allies launched air strikes in Yemen to counter Iran-backed Houthi rebels besieging the southern city of Aden.
Global oil prices rallied more than three dollars on the news. There are fears that an escalation of hostilities could set off a conflict across the region and send oil prices skyrocketing.
Last year the Middle East countries were responsible for nearly 35% of global oil production last year.
The dollar was pressured as a recent series of weak U.S. economic data added to uncertainty over the timing of a future interest rate hike.
Data issued on Wednesday showed that durable goods orders fell 1.4% last month, compared to expectations for a gain of 0.4%. Orders for core capital goods, a key barometer of private-sector business investment fell 1.4%, the sixth consecutively monthly decline.
Later in the day, the U.S. was to release weekly data on initial jobless claims as investors look for more clues over the strength of the economy.
Last week gold fell to a four-month low of $1,141.60 amid worries that the Fed will start raising rates as early as in June, before rallying more than 5% after the Federal Reserve projected a slower pace of rate hikes.
A delay in raising interest rates would be seen as bullish for gold, as it decreases the relative cost of holding on to the metal, which doesn't offer investors any similar guaranteed payout.
Meanwhile, silver futures for May delivery rallied 28.3 cents, or 1.66%, to trade at $17.28 a troy ounce, the most since February 16.
Copper for May delivery surged 7.4 cents, or 2.64%, to trade at $2.866 a pound.
