09:15 AM EDT, 06/12/2025 (MT Newswires) -- Gold was sharply higher early on Thursday as rising Middle East tensions supports safe-haven buying and the dollar fell to the lowest in three years amid slowing U.S. inflation.

Gold for August delivery was last seen up US$65.00 to US$3.408.70 per ounce.

The rise comes on increasing Middle East tensions, as a 60-day deadline set by the Trump Administration for a new deal to limit Iran's nuclear ambitions comes to an end. The U.S. is removing military dependents from the region and the United Kingdom Maritime Trade Organization issued a warning to shipping in the Gulf over the threat of escalated military activity in the area.

"The [U.S.] order comes as Israel continues to push Washington for a strike on the Iranian nuclear facilities and potentially reflect s increased US concern about Iranian-backed militias in Iraq. Even though this move falls short of a full embassy evacuation order, the limited departure order was probably not taken lightly by US senior security officials," Helima Croft, Head of Global Commodity Strategy and MENA Research at RBC Capital Markets noted.

Expectations easing U.S. inflation will allow the Federal Reserve to lower interest rates is also supporting gold and weakening the dollar. After on Wednesday reporting the Consumer Price Index rose less than expected last month, the U.S. Bureau of Labor Statistics on Thursday said wholesale inflation also rose less than expected in May. The Producer Price Index (PPI) rose 0.1% from April last month, higher than the drop of 0.2% in April but under expectations for a rise of 0.2%, according to Marketwatch.

Core PPI, which excludes volatile items, rose 0.1% monthly in May, up from a drop of 0.1% in April but above expectations for a rise of 0.3%.

The dollar was sharply lower following the data, generally supportive for commodities priced in the currency. The ICE dollar index was last seen down 0.92 points to 97.7, the lowest since early 2022. Treasury yields also fell, with the U.S. two-year note last seen paying 3.889%, down 6.7 basis points, while the yield on the 10-year note dropped 7.7 points to 4.35%.