Investing.com - Gold prices rallied to the highest level in almost four weeks on Thursday, after Saudi Arabia launched air strikes in Yemen, while the U.S. dollar 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.
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.
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 spiked 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.
Countries in the Middle East were responsible for nearly 35% of global oil production last year.
Elsewhere, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.6% to 96.51 early on Thursday. The index is down more than 4% since hitting a 12-year high of 100.78 on March 13.
The greenback remained under pressure as a recent soft patch of U.S. economic data added to uncertainty over the timing of a future interest rate hike.
Data 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.
Gold fell to a four-month low of $1,141.60 on March 17 amid concerns 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.
Elsewhere on the Comex, copper for May delivery surged 7.4 cents, or 2.64%, to trade at $2.866 a pound.
A weaker dollar boosts demand for raw materials as an alternative investment and makes dollar-priced commodities cheaper for holders of other currencies.