Gold jumped to the highest in almost four months after a US airstrike killed one of Iran’s most powerful generals, ratcheting up tensions in the Middle East and spurring demand for haven assets.
The strike in Baghdad ordered by President Donald Trump killed Qassem Soleimani, the Iranian general who led the Revolutionary Guards’ Quds force, the Defense Department said. Iran’s supreme leader, Ayatollah Ali Khamenei, has vowed that “severe retaliation” awaits those who killed the commander.
Bullion is already building on its stellar 2019 rally as the dollar weakens, and the return of geopolitical concerns to the foreground will further aid prices. Gold clinched its biggest annual gain since 2010 as looser monetary policy, unrest in regions from Chile to Hong Kong and buying sprees from key central banks and exchange-traded funds supported the haven.
“While this may be the knee-jerk reaction we are seeing at present, the likelihood of further reactions cannot be ruled out, which may keep gold supported in the near term,” Jingyi Pan, market strategist at IG Asia Pte in Singapore, said in an email.
Spot bullion rose as much as 1% to $1 543.93 an ounce, the highest since September 5, and traded at $1 541.77 at 2:03 p.m. in Singapore. Prices are up 2.1% this week. Futures on the Comex surged as much as 1.2%.
The rally comes even as US-China trade tensions ebb and US equities post fresh records. Last year’s advance marked a positive shift in investor attitude toward gold, according to RBC Capital Markets, which predicted further gains this year and next. Goldman Sachs, Citigroup and the UBS Group have said they’re looking for $1 600 an ounce.
January is historically gold’s best month, according to Bloomberg Intelligence. If prices match the average January advance of 2.7% over the past 20 years, they’ll surpass the six-year high reached in September.
The metal will approach $1 600 by February if it matches the 5.2% average increase of the past five years.Next up for investors is the latest reading on the health of the world’s biggest economy, with US.
ISM manufacturing data and minutes from the Federal Reserve’s last policy-setting meeting due later on Friday.
In other precious metals, silver climbed 1.1%, platinum advanced 0.5% and palladium rose 0.2%.