Gold prices climbed on Thursday as a widening conflict involving the US, Israel and Iran drove investors toward the safe-haven asset.

Spot gold was up 0.8 per cent at $5,177.33 per ounce, as of 04:35 (GMT) US gold futures for April delivery were up 1pc at $5,185.50.

“Gold benefits from the kind of geopolitical risks that we’ve seen flared up in the last few days. So (prices rose due to) a bit of a function of normalising financial conditions and a US dollar that’s pulling back from highs,” said Kyle Rodda, senior financial market analyst at Capital.com.

The dollar retreated from a more than three-month high touched earlier this week, making greenback-priced bullion less expensive for holders of other currencies.

The war widened sharply on Wednesday after a US 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.

The escalation came as the son of Iran’s slain supreme leader Ayatollah Ali Khamenei emerged as a frontrunner to succeed him, suggesting Tehran was not about to buckle to pressure, five days after the US and Israel launched a military campaign that has killed hundreds and convulsed global markets.

“I think this crisis is something that supports gold prices in the long run. But the uncertainty surrounding the war means we will continue to see heightened volatility until we see signs that we’ve reached peak escalation,” Capital.com’s Rodda said.

Bullion, traditionally viewed as a safe-haven asset, has risen about 20pc so far this year, notching successive record highs amid heightened global political and economic uncertainty.

Meanwhile, US President Donald Trump officially nominated former Federal Reserve Governor Kevin Warsh to be the US central bank’s next chair, putting the president one step closer to installing a rate-cut-friendly Fed chief.

Markets expect the Fed to keep interest rates steady on March 18, according to CME Group’s FedWatch tool.

Investors now await the weekly US jobless claims data, due later in the day, and the US employment report for February on Friday.

Spot silver rose 1.7pc to $84.86 per ounce. Platinum climbed 1.4pc to $2,179.48, and palladium gained 0.5pc to $1,682.85.