The price of gold is approaching its highest level in seven years as tensions escalate between the United Stated and Iran.
By Monday afternoon, the spot gold rose 1.6% to reach a high of $1 575.03/oz, while the Brent oil price jumped to a three-month high of above $70 a barrel.
Sasol rose 2% to R318.35 in response to the stronger fuel price, while gold shares also strengthened. Gold Fields gained almost a percent on the day.
Last week, a US airstrike killed a top Iranian military commander. Iran promised "severe revenge" as retaliation against the assassination and three Americans have since been killed in Kenya. The Middle East nation also voted to expel US troops over the weekend and said it would no longer adhere to the 2015 nuclear deal limits.
Investors on the defensive
OANDA Europe’s senior market analyst Craig Erlam said the sustained surge in gold price was not surprising because safe havens, like gold, tend to perform solidly in times like these while stocks and other risky assets take a beating.
Hussein Sayed, Chief Market Strategist at online trading platform, FXTM said investors might remain on a defensive mode, which benefits the price of gold, for a while as retaliatory response by Iran might be protracted event.
"In times of political and market uncertainty, there is no better alternative to buying gold and despite looking overbought on the charts, the rally will continue as long as uncertainty stays high," he said.
On Monday, palladium rose past the key $2 000 level to hit a new record. There is a big shortage of the metal, which is used in the manufacturing of vehicle exhausts, in the global market.