prices rose to a near two-month high on Friday, driven by safe-haven demand as geopolitical tensions escalated in the Middle East following Israel’s widescale strikes on Iran.
Spot gold was up 1 per cent at $3,417.59 an ounce, as of 0803 GMT, after hitting its highest point since April 22 earlier in the session. Bullion has gained more than 3.2 per cent so far this week.
US gold futures gained 1 per cent to $3,438.00.
The Middle East was thrust into renewed conflict after Israel launched widescale strikes against Iran, saying it targeted nuclear facilities, ballistic missile factories and military commanders and that this was the start of a prolonged operation to prevent Tehran from building an atomic weapon.
Iran launched about 100 drones towards Israeli territory in retaliation.
The rising tensions add another layer of market uncertainty, coming on the heels of US President Donald Trump’s trade policies.
“For now, the attacks add to the bullish mood in the gold market … with the situation being highly in flux, it is too early to tell whether this shock will lastingly lift prices,” said Carsten Menke, an analyst at Julius Baer.
“Should there be disruptions to oil supplies – either directly due to attacks or indirectly due to politically imposed measures – or should the conflict spread in the region, then gold could show a more lasting reaction.”
Gold is used as a safe investment during times of geopolitical and economical uncertainty. It also tends to thrive in a low-interest-rate environment.
Elsewhere, a Consumer Price Index (CPI) report on Wednesday showed cooler-than-expected data for May, followed by another data on Thursday indicating that US producer prices rose less than anticipated.
Demand for physical gold weakened across major Asian hubs this week as soaring prices deterred buyers, with rates in India surging past the psychologically key 100,000-rupee mark.
Spot silver fell 0.2 per cent at $36.31 per ounce, platinum lost 1.6 per cent to $1,274.50 and palladium shed 0.5 per cent to $1,060.44. All three metals were set for weekly gains.