Gold prices have continued to surge this week as tensions between the U.S. and Iran drive investors toward safe harbors.
Gold prices increased $50 in the opening trading days of 2020 and then reached their highest levels since 2013 in the wake of Iranian missile attacks on military bases in Iraq.
The commodity was trading at $1,554.62 per ounce at the time of publication.
Bethel Loh, a macro strategist at ThinkMarkets, said in a note that it's a classic demonstration of risk-off, as markets took to gold with no hesitation, pushing the shiny metal well past third-quarter 2019 highs of $1,557.
Benchmark crude oil prices also rose following the U.S. airstrike that killed Qasem Soleimani, the leader of the Iranian Quds force.
“The gain of 1.52% sees the risk-off hedge ink new highs not seen since 2013. Fears that Iran will disrupt major oil infrastructure, not dissimilar to when drones attacked Saudi Arabia, also saw Crude futures gap at the open and sustain above key psychological level of US$70/bbl,” Loh said.
A Santa Rally In Gold
Gold initially traded higher throughout the Christmas holiday in a move known as a Santa Rally due to increased demand combined with thin liquidity in FX at the year's end, said Olivier Konzeoue, an FX sales trader at Saxo Markets.
“The escalation of tensions in the Middle East has since sent gold to a seven year high, as markets seek refuge in a traditional safe haven in times of uncertainty. We expect gold to redeem some of its recent gains at the first signs of de-escalation.”
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