Gold steadied after a two-day decline, as traders weighed a stronger US dollar and rallying oil prices nearly two weeks into the war in the Middle East.

Spot gold edged up 0.53% to $5,106.33 an ounce. Silver rose 1.05% to $84.73. Platinum and palladium also advanced.

Bullion was near $5,090 an ounce in early trading, having lost more than 2% in the previous two sessions. US President Donald Trump and Iran’s new supreme leader, Mojtaba Khamenei, struck defiant tones on the 13th day of a conflict that has effectively blocked shipping through the Strait of Hormuz and created the oil market’s biggest-ever disruption. Crude extended gains from its highest close since August 2022, while a gauge of the dollar has risen 0.5% this week.

For gold, higher energy prices and rising inflationary concerns have greatly reduced expectations that the Federal Reserve and other central banks will cut interest rates. Dwindling hopes of a reduction were further hit by the latest US jobless report, which showed new claims remained subdued.

US Treasuries slumped on Thursday, sending short-term yields to their highest since August, and traders now see virtually no chance of a rate cut at next week’s Fed meeting and only a 70% chance of a cut this year. Higher borrowing costs are typically a negative for precious metals, which don’t pay interest.

The ongoing US-Israeli conflict with Iran has sucked momentum from a prolonged rally in gold, with trading choppy over the last two weeks as investors sold the metal to cover margin calls in other parts of their portfolios. Bullion has still gained nearly 18% so far this year and has largely held above the $5,000-an-ounce threshold.

A prolonged conflict — and persistently high crude prices — would add pressure to the metal. The International Energy Agency said on Thursday that the current turmoil in oil markets was unprecedented, a day after its members agreed to release a record 400 million barrels from emergency reserves.