The outbreak of the ​war in late February drove gold from a record high of $5,595 per ounce in January ​to below $4,000 in June as investors sought liquidity and some central banks tapped reserves ⁠to support domestic economies amid an oil price rally.

"It feels as though the handbrake has finally ​been released from gold," said Ross Norman, an independent analyst.

Gold prices have broken above two key resistance ​levels this month, helped by lower oil prices and softer U.S. inflation data that reduced expectations for future rate hikes.

"If oil doesn't steal the show again, if the situation in the Middle East does not erupt and oil prices ​spike, then it looks as if the path of least resistance for gold is higher," said ​James Steel, chief precious metals analyst at HSBC.

The strength of the price rebound over the past two weeks suggests ‌central ⁠banks or sovereign wealth funds may have been active, Steel said, adding that this thought was an inference rather than confirmed knowledge.

Another likely source of support was institutional demand for large bars as premiums in Asian trading hubs, including China, implied renewed buying interest. In China, the gold premium was at $1.50 ​an ounce last week.

"It ​is really, I think, ⁠the rebuilding of positions that large institutions had before the conflict with Iran," Steel said.

Limiting the upside for bullion are faltering talks to end the Iran ​war, subdued jewellery and coin demand as well as flows into gold-backed ​ETFs, which ⁠are sensitive to interest rates. According to the World Gold Council, these ETFs added only $7 billion to $582 billion of assets under management in the first half of August.

Technical signals also act as a headwind: the ⁠relative strength ​index suggests gold is approaching near-term "overbought" levels, keeping the 200-day ​moving average, currently at $4,504, as a strong resistance level.