Gold edged higher on Wednesday on safe-haven demand and as a retreat in oil prices calmed inflation worries, reviving expectations for potential Federal Reserve rate cuts this year as investors awaited US Consumer Price Index (CPI) data that may offer more cues.

Spot gold was up 0.2 per cent at $5,202.10 per ounce, as of 05:25 GMT. US gold futures for April delivery fell 0.6pc to $5,211.

Oil prices dropped below $90 per barrel on reports of the International Energy Agency (IEA) proposing the largest release of oil reserves in its history to curb surging prices.

“With these (inflation) concerns having eased … hedging and safe-haven attributes (of gold) has once again come to the fore. So, I think from current levels we remain optimistic,” said Nikos Kavalis, Singapore managing director of Metals Focus.

The US and Israel pounded Iran with what the Pentagon and the Iranians on the ground called the most intense airstrikes of the war, despite global markets betting that Trump will seek to end the conflict soon.

The war has effectively shut the Strait of Hormuz, a chokepoint for a fifth of global oil and liquefied natural gas, stranding tankers for more than a week and forcing producers to halt output as storage fills, driving energy prices soaring.

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

“I think it’s very likely that we’ll see gold get to over $6,000 an ounce by the third or fourth quarter this year, probably even higher early next year,” Kavalis said.

Markets are now awaiting the US consumer price index for February, due later in the day, and the Personal Consumption Expenditures (PCE) index — the Fed’s preferred inflation gauge — on Friday.

Investors expect the Fed to keep rates steady at the end of its two-day meeting on March 18 but still see at least two rate cuts this year, per CME Group’s FedWatch tool.

Spot silver edged 0.2pc lower to $88.24 per ounce. Spot platinum rose 0.1pc to $2,202.52, and palladium rose 0.9pc to $1,669.82.