Gold advanced to near a record after Iran’s unprecedented attack on Israel over the weekend drove demand for haven assets.
Bullion rose as much as 1.2% as the conflict in the Middle East entered a dangerous new phase, before paring around half of that gain. The Islamic Republic fired more than 300 drones and missiles against Israel, though most were intercepted and there were no fatalities reported.
The precious metal broke through US$2,400 an ounce on Friday, but closed the session lower as technical indicators indicated its rally had run too hot and investors liquidated positions. The latest developments in the Middle East rekindled the flight to safety, with fears over a potential retaliation by Israel likely to support gold in the near term.
The escalating tensions in the Middle East are “a reason in itself to buy gold,” said Chris Weston, head of research at Pepperstone Group. “There’s a sizable geopolitical premium being priced into moves,” he said, adding that the medium-term path will likely be higher.
Gold has surged by almost 20% since mid-February in a rally that’s taken many investors by surprise. The Federal Reserve moving closer to its much-anticipated pivot, robust buying by central banks and increased demand from Chinese consumers have been the main drivers, along with rising geopolitical risk in the Middle East and Ukraine.
Spot gold rose 0.4% to $2,354.62 an ounce as of 8.51am in Singapore (7.51am Thailand time), after increasing 0.6% last week. The Bloomberg Dollar Spot Index was flat, following a 1.3% gain last week, the most since September 2022. Silver advanced, while platinum and palladium fell.