Gold prices climbed sharply as tensions in the Middle East drove demand for safe assets. Softer U.S. inflation also boosted hopes for rate cuts, supporting gold's rally above $3,400.

GOLD prices rose on Thursday, as rising Middle East tensions boosted demand for safe-haven assets, while softer-than-expected US inflation data raised expectations of potential interest rate cuts by the Federal Reserve.

If prices go up, Fed officials may be inclined to raise its benchmark rate, raising borrowing costs for businesses and consumers. That could lead to businesses to cut jobs, particularly in the high-growth tech sector, and force Americans to pull back on spending, which drives more than 70% of economic activity in the U.S.