Bengaluru — Gold prices rose on Wednesday, moving away from a one-week low touched in the previous session, as escalating tensions in the Middle East drove investors towards the safe-haven metal, while a stronger dollar limited the metal’s gain.

Spot gold was up 0.3% at $1,420.65 an ounce as of 3.53am GMT, after hitting its lowest since July 17 at $1,413.80 in the previous session.

US gold futures were steady at $1,421.30 an ounce.

“We have geopolitical tensions in Iran, and also we remain very cautious and sceptical about the (US-China) trade negotiations expected to begin next Monday, because plenty of things remain unsolved between the two nations,” said Margaret Yang Yan, a market analyst at CMC Markets.

“On the other side, the dollar index is rallying which is having a negative impact on gold prices.”

Uncertainty in the Middle East continued as a US navy ship took defensive action against a second Iranian drone in the Strait of Hormuz last week, but did not see the drone go into the water, the US military said on Tuesday.

On the trade front, a report said US trade representative Robert Lighthizer would travel to Shanghai next week for meetings with Chinese officials to hammer out a deal to end the long-drawn trade tussle between the top two economies.

The dollar extended gains to a five-week high, making gold expensive for holders of other currencies.

The European Central Bank is likely to at least offer a nod to easier policy at its meeting on Thursday, while the US central bank is widely expected to lower interest rate at its meeting ending July 31.

Futures remain 100% priced for a rate cut of 25 basis points (bp) from the Federal Reserve next week, and even imply an 18% chance of 50 basis points.

“If the Fed does a 25 bp rate cut next week, I don’t think gold prices will feel any stronger as it has been already priced in,” said Howie Lee, OCBC Bank economist. “But if the Fed surprises with a 50 bp cut, that might push gold prices to test the $1,450 level.”

Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.25% from Monday to 823.13 tons on Tuesday.

Spot gold looks neutral in a narrow range of $1,412-$1,427 an ounce, and an escape from the range could suggest a direction, said Reuters technical analyst Wang Tao.

Among other precious metals, silver rose 0.3% to $16.45 an ounce. Platinum gained 0.5% to $858 an ounce, while palladium eased 0.3% at $1,522.01.