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Gold futures on Monday soared to their highest level since April of 2013, as the killing last week of a top Iranian military commander, Qassem Soleimani, reverberated through financial markets, momentarily upending appetite for assets considered risky and boosting traditional haven assets like gold and bonds.
February gold GCG20, +1.59% on Comex added $25.90, a gain of 1.7%, to last trade at $1,578.70 an ounce, after it briefly touched $1,590.90 in intraday action, representing the metal’s highest level since April 1, according to FactSet data. The move for bullion comes after the commodity settled on Friday at the loftiest level since Sept. 4.
March silver SIH20, +1.43% picked up 33 cents, or 1.8%, to trade at $18.480 an ounce.
Last week, the most active gold contract gained 2.3%, its second week of gains, while silver prices added 1.1%, also landing it higher for two consecutive weeks.
On Sunday, the Iraqi parliament passed a nonbinding resolution to expel American troops in the wake of the U.S. drone strike that killed Soleimani, leader of the foreign wing of Iran’s Islamic Revolutionary Guard Corps, on Iraqi soil.
That act has intensified tensions in the U.S., which have helped to boost the appeal of assets considered safe during global political conflicts.
Trump has threatened harsh sanctions against Iraq if it expels U.S. troops, and doubled down on earlier comments threatening to target Iranian cultural sites if Iran strikes back against the U.S.
Gold and other haven assets were boosted, while oil prices jumped and the Dow Jones Industrial Average DJIA, -0.81% and S&P 500 index SPX, -0.71% came under pressure on Friday and were set to trade lower on Monday.
Meanwhile, the benchmark 10-year Treasury yield TMUBMUSD10Y, -0.68% was flat at 1.790% but is down about 10 basis points from before the Iranian military leader’s killing.
Bullion’s price has benefited from heightened political tensions but also has enjoyed softness in the dollar, which has occurred as investors shift to Swiss franc USDCHF, -0.3290% and Japanese USDJPY, +0.00% amid the potential for political turmoil.
The U.S. ICE Dollar Index DXY, -0.24%, a measure of the buck against a half-dozen currencies, was down 0.2% at 96.643 and has posted weekly declines in the last two weeks.
A weaker buck can make gold more attractive to buyers using other currencies, and lower bond yields can also help boost the comparative appeal of gold against government debt.
“Gold continues its breakout higher as it is now at the highest level since April 2013,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a Monday research report.
“I remain bullish but caution not to buy it on geopolitical concerns because as stated they are usually temporary. Buy it instead because the dollar continues to weaken and real yields continue to fall,” he said.
