Gold prices rose on Wednesday, to near record-high levels as risks of the Middle East conflict spreading to other regions brought safe-haven flows into bullion, alongside short-term support from falling U.S. dollar.

Spot gold rose 0.2% to $2,388.56 per ounce, as of 1138 GMT, nearing its all-time high of $2,431.29. U.S. gold futures fell 0.1% to $2,404.90.

"The precious metal is heavily overbought from a technical perspective...but bulls are drawing strength from the overall uncertainty across markets with geopolitics overshadowing data and monetary policy expectations," said FXTM senior research analyst Lukman Otunuga.

Market participants are keeping a close eye on developments in the Middle East, particularly on Israel's response to Iran's attacks, while U.S. and its allies planned fresh sanctions against Iran.

Gold is traditionally used as a hedge against geopolitical and economic uncertainty. It has gained about 16% so far this year and more than $500 since October 7, the tipping point in the Middle Eastern conflict.

Otunuga suggests that while gold has largely remained uncorrelated with the U.S. dollar and Treasury yields in the current trend, it may still show short-term responses to movements in both.

Both the dollar and the 10-year Treasury yields eased from their five-month peaks, making the greenback-priced bullion more attractive.

Meanwhile, on the macroeconomic front, several global brokerages have pushed back their expectations of the Federal Reserve starting to lower interest rates to September, rather than June, following a strong batch of recent U.S. data, including hotter-then-expected inflation.

Top Fed officials, including Chair Jerome Powell, backed away from providing any guidance on when rate cuts may start, saying instead that monetary policy needs to be restrictive for longer.

Spot silver rose 1.4% to $28.47 per ounce.

Spot platinum rose 0.1% to $957.58 and palladium was up 1.2% at $1,026.27.

(Reporting by Harshit Verma in Bengaluru, Editing by Louise Heavens and Ravi Prakash Kumar)