Gold edged higher on Thursday on a slightly weaker dollar, though investors remained cautious, closely ​watching developments in the Middle East for their impact on inflation and monetary policy.

Spot gold ​was up ​0.7% at $4,105.40 per ounce by 1116 GMT, after dropping to its lowest since July 1 on Wednesday.

U.S. gold futures for August delivery were ⁠up 0.8% at $4,114.80.

"Gold is trying to form a bottom today as dollar strength eases," said Nikos Tzabouras, senior market analyst at Tradu.com.

However, the higher-for-longer rate environment is detrimental for non-yielding assets like gold, which can lead to deeper declines, Tzabouras added.

The ​U.S. dollar was ‌steady after ⁠hitting an almost ⁠one-week low earlier, making greenback-priced gold more affordable for other currency holders.

The U.S. military said it ​carried out fresh strikes on Iran on Wednesday, prompting ‌retaliatory attacks on Kuwait and Bahrain and raising tensions ⁠in the region.

U.S. President Donald Trump said Iran had reached out seeking a deal, easing some concerns over a further escalation.

Federal Reserve minutes released on Wednesday showed rising concerns about inflation, with a handful of policymakers seeing the case for a rate hike before the central bank opted to keep rates on hold last month.

Traders are currently pricing a 63% chance of an interest rate hike in September, the CME FedWatch tool showed.

The market will ‌be closely watching next week's inflation data and Fed Chair ⁠Kevin Warsh's congressional testimony for fresh direction.

HSBC cut its ​2026 average gold price forecast to $4,560 per ounce from $4,864, while reducing its 2027 forecast to $4,925 from $5,000. HSBC expects greater official sector demand for gold later in the year based ​on long-term ‌diversification.

Elsewhere, spot silver rose 1.1% to $58.91 per ounce, while platinum ⁠gained 2.1% to $1,611 and palladium advanced ​2.6% to $1,244.75.