Gold jumps after Israel launches strikes on Iran's nuclear sites
Spot gold was 0.9% higher at US$3,416.21 an ounce as of 8.18am in London. (File pic)
LONDON : Gold spiked after Israel conducted airstrikes targeting Iran's nuclear sites and military leadership, raising fears that hostilities between the two nations may spiral into a wider regional conflict.
Bullion climbed as much as 1.7% on haven demand from investors, before paring some gains.
Israeli Prime Minister Benjamin Netanyahu said the operation would continue until the 'threat' was removed.
Iran vowed a 'severe response' to the airstrikes, which also targeted the nation's nuclear scientists.
The US wasn't involved in Israel's attacks, according to secretary of state Marco Rubio, but Iran said it would respond against America.
Gold is trading around US$90 below a record of US$3,500.10 an ounce reached in April.
'The risk of Iranian retaliation, including threats to US bases, adds to the uncertainty and supports haven flows,' said Charu Chanana, a strategist at Saxo Capital Markets Pte.
'With markets already on edge and risk sentiment deteriorating, gold is likely to stay bid as a hedge – not just against conflict risk, but also a possible spillover into inflation and volatility,' Chanana said.
The move higher extended a two-day gain, after weak US inflation and jobs data fueled bets that the Federal Reserve will lower interest rates later this year.
Yesterday's report showed US producer price inflation remained muted in May, while a separate print showed recurring applications for unemployment benefits rose to the highest since the end of 2021.
Gold has rallied 30% this year, with investors increasingly seeking safety in the haven asset due to concerns over President Donald Trump's aggressive trade policies and geopolitical tensions, including in Ukraine.
Strong demand from central banks and sovereign institutions has also supported prices.
Israel's attack on Iran followed repeated warnings from Netanyahu about striking the Opec producer and crippling its atomic programme.
The US and Iran were meant to meet for their next round of nuclear talks on Sunday in Oman, but it's unclear if those negotiations will happen now.
Iran launched 100 drones in retaliation for the attack, according to Israel.
Iranian state television reported that the head of the Islamic Revolutionary Guard Corps, Hossein Salami, and Armed Forces chief of staff Mohammad Bagheri were both killed in the strikes.
Spot gold was 0.9% higher at US$3,416.21 an ounce as of 8.18am in London.
The Bloomberg Dollar Spot Index rose 0.3%. Silver, platinum and palladium fell. In energy, Brent oil rallied as much as 13% before paring most of the gains.
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