Gold firms on softer dollar, inflation data and Mideast risks in focus

The Middle East war intensified with Iranian-backed Houthis in Yemen launching strikes on several Saudi cities, further embroiling a U.S. ally in the conflict, while U.S. forces hit multiple Iranian oil tankers and Iran struck a U.S. base in Jordan.

Brent crude prices jumped for a fourth straight session. Rising crude prices tend to put upward pressure on inflation, as higher energy costs filter through the broader economy. O/R

According to the CME FedWatch Tool, traders see about a 60% chance that the Federal Reserve will raise interest rates at its upcoming policy meeting.

Although gold is widely regarded as an inflation hedge, elevated rates weigh on the appeal of non-interest-bearing bullion.

"Precious metals face a near-term test, but another major selloff is unlikely," said Kelly Xu, a commodities strategist at Alpine Macro.

"Physical market tightness remains a key issue, while structural supply deficits could persist amid inelastic mine production and ongoing demand from electrification, electronics and AI-related infrastructure, providing fundamental support for silver over the longer term."

Spot silver XAG= gained 0.4% at $66.00, platinum XPT= rose 1% at $1,831.76 while palladium XPD= fell 0.3% to $1,344.69.

Gold prices firmed on Wednesday as the dollar remained muted, while renewed attacks between the U.S. and Iran and upcoming inflation data kept the focus on the interest-rate outlook.

Spot gold XAU= rose 0.4% at $4,372.19 per ounce, by 0230 GMT. U.S. gold futures GCcv1 lost 0.5% at .