PRECIOUS-Gold rises as Middle East conflict escalates, dollar rally pauses

By Ashitha Shivaprasad

March 4 (Reuters) - Gold prices rose on Wednesday as the escalating conflict in the Middle East attracted safe‑haven bids, while a pause in the U.S. dollar's rally also lent support.

Spot gold XAU= was up 0.7% at $5,120.71 per ounce by 1831 GMT, after falling more than 4% on Tuesday.

U.S. gold futures GCcv1 for April delivery settled 0.2% higher at $5,134.70.

"The dollar has seen a pullback, which is providing some support. Overall, the macro-fundamental factors remain broadly supportive of gold. Certainly, as long as the war with Iran is ongoing, that's going to remain supportive as well," said Peter Grant, vice president and senior metals strategist at Zaner Metals.

"There is risk that volatility continues. But I remain bullish and think we will see new all-time highs."

The dollar eased after sharp gains on Tuesday. A softer dollar makes greenback-priced gold less expensive for holders of other currencies. USD/

The U.S.–Iran war widened sharply after a U.S. submarine sank an Iranian warship off Sri Lanka, killing at least 80 people, and NATO air defences destroyed an Iranian ballistic missile fired towards Turkey.

Gold, a non-yielding asset that is considered a hedge against uncertainty and inflation, tends to be preferred during periods of low interest rates.

The ADP's national employment report showed U.S. private payrolls increased more than expected in February, though data for the prior month was revised sharply lower.

Investors are turning their attention to the release on Friday of the U.S. employment report for February. Nonfarm payrolls likely increased by 59,000 jobs last month after accelerating by 130,000 in January, a Reuters survey of economists predicted. FEDWATCH

Spot silver => firmed 1.3% to $83.07 per ounce after falling more than 8% in the previous session.

Spot platinum XPT= added 2.8% to $2,141.71 while palladium XPD= rose 1.2% to $1,667.51.

The World Platinum Investment Council said the global platinum market is heading for its fourth consecutive annual deficit in 2026.