Gold prices rose in Asian trade on Wednesday after a report that Israel was planning to attack Iran’s nuclear sites ramped up safe haven demand, while weakness in the dollar also helped.

Persistent concerns over U.S. fiscal health, plus uncertainty over trade negotiations also kept gold relatively well-bid, helping bullion recoup some of last week’s losses. 

Spot gold rose 0.4% to $3,302.02 an ounce, while gold futures for June rose 0.6% to $3,303.62/oz by 00:57 ET (04:57 GMT). 

Gold rises as Israel-Iran report boosts haven demand 

Gold rose after CNN reported that Israel was preparing for a potential military strike on Iran’s nuclear facilities, citing U.S. officials familiar with recent intelligence.

While Israeli leaders were yet to make a final decision on the attack, military movements suggested that preparation for the attack were underway. 

Any potential strike on Iran’s nuclear sites is likely to spark a severe deterioration in Middle Eastern geopolitics, and also goes against Washington’s desire for diplomacy with Tehran. 

An Israeli strike is also likely to draw bitter retaliation from Iran, with the two countries having engaged in a series of strikes against each other last year. 

The prospect of heightened instability in the Middle East boosted oil prices and sparked increased inflows for havens such as gold and the Japanese yen. 

Other precious metals were mixed, but were sitting on some gains this week as they benefited from a softer dollar. Platinum futures fell 1% to $1,050.50/oz, while silver futures rose 0.2% to $33.255/oz. 

Among industrial metals, benchmark copper futures on the London Metal Exchange rose 0.4% to $9,559.25 a ton, while U.S. copper futures rose 0.4% to $4.6928 a pound. 

Softer dollar benefits gold, metal prices

Weakness in the dollar also benefited gold and the prices of other commodities priced in the greenback. 

Recent weakness in the dollar came after Moody’s downgraded the U.S. sovereign credit rating by one notch, citing concerns over stretched fiscal spending and a growing debt pile.

Warnings from several Federal Reserve officials on increased economic and trade uncertainty also pressured the dollar, even as Fed officials said the central bank will not cut interest rates anytime soon. 

Gold remained comfortably above the $3,000/oz level, and was less than $200 away from a record high hit earlier this month.