Investing.com – Gold prices were flat during early morning trade in Asia Friday, just hours after hitting their highest point in more than five years driven by geopolitical tensions, the possibility of lower rates and weakness in the dollar.

Gold futures for August delivery were flat, trading at US$1,396.95 by 9:20 PM ET (01:20 GMT). Gold prices have not topped US$1,400 since 2014.

One key factor driving prices of safe haven gold, along with oil and other assets, are escalating tensions between the U.S. and Iran.

On Thursday, Iran admitted shooting down a U.S. drone. The admission came just a week after two oil tankers were attacked near the Strait of Hormuz, a key oil route. The U.S. also blames the tanker attacks on Iran. U.S. President Donald Trump tweeted that “Iran made a very big mistake”.

Gold tends to go higher during periods of instability.

Gold has also received a boost from an increasingly dovish stance by the U.S. Federal Reserve.

During a meeting on Wednesday, the Fed did not change rates but suggested it could cut them later in the year. Lower rates tend to make gold more attractive.

Rob Carnell, chief economist and head of Asia Pacific research at ING, told CNBC that the expectation that the Fed will cut rates made gold “quite attractive”.

“The gold market is suggesting to us that there’s sufficient liquidity to move their metal higher,” Jeff DeGraaf, found and chairman at Renaissance Macro Research told CNBC.

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