Gold prices surged Monday as investors rushed into safe-haven assets after the U.S. and Israel launched major strikes on Iran that killed the country’s Supreme Leader Ayatollah Ali Khamenei.
At 05:55 ET (10:55 GMT), Spot gold rose 2.2% to $5,392.81 an ounce, after reaching as high as $5,419.32/oz earlier in the session, the highest since late January. U.S. Gold Futures climbed 3% to $5,407.01.
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Middle East conflict boosts gold’s demand Investors have rushed into safe-haven gold on Monday, with the killing of Iran’s most powerful figure raising fears of a broader regional conflict and potential disruption to oil shipments through the Strait of Hormuz, a critical global energy artery.
Israeli forces launched a new wave of strikes on Tehran on Sunday, with missiles and aircraft targeting command infrastructure and air defences. Tehran responded with further missile barrages at Israeli territory and U.S. bases in the Gulf.
The geopolitical shock triggered a classic risk-off move across markets, with equities sliding and crude oil surging, reinforcing demand for bullion as a store of value.
"A regional spillover or disruption to energy supplies would materially boost gold through higher oil prices, increased inflation expectations and contained real yields," ING analysts said in a note.
"Importantly, it is not only the risk of escalation, or broader conflict, that markets must now discount, but also the considerably wider range of potential outcomes that now exist, given kinetic action is underway," said Michael Brown, Senior Research Strategist at Pepperstone. "This wider range, unsurprisingly, makes accurately pricing risk incredibly difficult, if not impossible, hence leading to a ‘de-risk now, ask questions later’ approach for most."
Gold could hit $6,000/oz by year-end Brown, flagged $5,400/oz, followed by the late-January record high of $5,595/oz, as the key levels to watch to the upside.
"This weekend’s developments do reinforce the strong fundamental bull case for gold, which will remain the beneficiary of haven inflows in an increasingly uncertain world, with hefty retail and reserve demand both providing tailwinds too," he said.
Brown also sees a potential move towards the $6,000/oz mark by the end of the year.
Gold has risen nearly 25% this year, buoyed by geopolitical risks, central bank purchases, and Federal Reserve easing bets.
Silver also rises Among other precious metals, Silver prices rose 2.6% to $95.700 per ounce, while platinum slipped 0.2% to $2,369.00/oz.
Benchmark Copper Futures on the London Metal Exchange edged up 0.1% to $13,379.78 a ton and U.S.Copper Futures gained 0.1% to $6.0615 a pound.
