Spot gold prices on Monday jumped over 2 per cent to $1,587 an ounce, their highest level since April 2013 owing to the escalating US-Iran tensions.
Other safe haven assets also edged higher owing to the war-like situation between the two biggest oil producing countries, following the US attack and killing of a top Iranian military commander.
Iranian general Qasem Soleimani was killed last week in Iraq by a US drone, sending global financial markets into a tailspin ever since.
Iran on Sunday said it will no longer abide by any of the limits imposed by 2015 nuclear deal, sparking fears of a military conflict. Besides, Iraq's parliament urged its leaders to expel US-led coalition troops from the country.
Gold prices on Monday also drew support from the weakening rupee against the US dollar, as India is one of the biggest importers of gold. Bullion prices jumped to Rs41,096 per 10 gram.
"Going forward, the major focus will continue to be on developments related to geopolitical tensions in the Middle East and its impact on global sentiments. Escalating tensions may dent market risk appetite and weigh down on riskier assets like global equity markets and commodities like base metals," said Ravindra Rao, VP and Head Commodity Research of Kotak Securities.
"However, this may continue to lend support to safe haven assets like gold and silver and will also be supportive to crude oil prices amid worries over supply disruption from the region. The Middle East accounts for nearly half of the world's oil production, while Iraq is the second largest producer among the Organization of the Petroleum Exporting Countries (OPEC)", Rao added.
In a series of aggressive tweets, US President Donald Trump said on Sunday: "They (Iran) attacked us, and we hit back. If they attack again, which I would strongly advise them not to do, we will hit them harder than they have ever been hit before!"
Copyright © 2020 Khaleej Times. All Rights Reserved.