Gold rose, as war in the Middle East rattled markets and sent investors flocking to safer assets.
Bullion climbed more than 2% to around $5,390 an ounce in early trading, having gained more than 3% in the previous week as American troops amassed in the region. Conflict spread over the weekend after the US and Israel attacked Iran and Tehran responded with waves of missiles at targets in multiple countries. Iran’s supreme leader, Ayatollah Ali Khamenei, was killed on the first day of strikes.
Wider geopolitical tensions and US President Donald Trump’s upheaval of international relations have been key factors in a long-running rally for gold, which has also been supported by elevated central-bank buying and a wider investor shift away from sovereign bonds and currencies. The metal has gained about a quarter so far this year, despite an abrupt pullback from a record high above $5,595 an ounce at the end of January.
Bullion posted its seventh consecutive monthly gain in February, the longest streak since 1973. Even ahead of the war with Iran, Trump had adopted an increasingly aggressive foreign policy. US troops seized Venezuela’s then-president Nicolás Maduro in January and the administration made threats to annex Greenland.
Gold’s move higher on Monday is “an early indication of investors seeking safe-haven assets amid the escalating regional uncertainty,” said Ahmad Assiri, a strategist from Pepperstone Group Ltd.
The US and Israel launched strikes across Iran on Saturday, while calling on the population to rise up against the Islamic regime. Tehran’s retaliatory barrage hit targets in Israel, as well as American bases and sites in countries including Qatar, the United Arab Emirates, Kuwait and Bahrain. Oil surged by the most in four years, with the effective closing of the Strait of Hormuz plunging the global crude market into turmoil, while the dollar also rose.
“Precious metals, oil and commodities are rising despite the dollar’s rebound, even though they are priced in US dollars,” said Hong Hao, chief investment officer of Lotus Asset Management Ltd. “This demonstrates that these hard assets are the true hard currency during this extraordinary period,” he said. The Bloomberg Dollar Spot Index, a gauge of the US currency, climbed 0.4% early on Monday.
Spot gold rose 1.9% to $5,380.91 an ounce as of 7:40 a.m. in Singapore. Silver advanced 2.4% to $96.04. Platinum and palladium also gained.
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