(RTTNews) - Gold prices were up more than 1 percent on Wednesday, recovering some of the losses in the previous session amid rising uncertainty in global trade and energy markets.
Spot gold surged 1.9 percent to $5,182.69 an ounce while U.S. gold futures were up 1.4 percent at $5,194.44.
The dollar index extended gains for a third day running amid escalating geopolitical tensions and reduced expectations for interest rate cuts from the Federal Reserve.
After U.S. and Israeli forces attacked Iran, Tehran retaliated by striking U.S. embassies and threatening regional economies.
Shipping through the Strait of Hormuz was halted, quadrupling tanker costs and causing global air transport chaos.
Analysts have warned that a sustained rise in energy prices could cause inflation to flare back up, complicating the Federal Reserve's anticipated interest rate cuts.
Minneapolis Fed President Neel Kashkari said on Tuesday it is too soon to assess the inflationary impact of the Middle East conflict.
New York Fed President John Williams didn't address the impact of the Iran conflict on the economy and monetary policy.
Kansas City Fed President Jeff Schmid said that inflation remains too high and that policymakers have little room for complacency.
As rate cut expectations fade, reports on U.S. private sector employment and service sector activity will be in the spotlight later in the day.
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