Escalating US-Iran tensions drive gold higher

London — With tensions between the US and Iran escalating this week and sending oil markets sharply higher Friday, spot gold has been in demand as traders and participants seek out safe havens.

Spot gold was trading close to $1,550/oz during intraday trade Friday, just shy of its 2019 high, as geopolitical risk in the Middle East ratcheted up after Iran vowed "harsh revenge" for US airstrikes that killed some of its top military commanders, including General Qassim Soleimani, head of the Iranian Revolutionary Guard's Quds Force. Gold started 2020 around $1,515/oz.

The oil market meanwhile was on tenterhooks Friday. ICE Brent crude futures jumped as much as 4.9% to hit a high of $69.90/b in early European trading Friday morning.

The front-month Brent futures contract is now trading at the highest since September 16, 2019, the first trading day after attacks on Saudi Arabia's pivotal Abqaiq processing facility and Khurais oil field. The Saudi attacks saw the benchmark contact surge more than $10/b to $71.95/b.

?The tension between the US and Iran is lifting gold, with the price close to the six-and-a-half year peak reached in September,? Carlo Alberto De Casa, chief analyst at ActivTrades, said in a research note.

"The bullish scenario of the last few days has now accelerated as investors head for haven assets. From a technical point of view, prices will find a solid resistance area between $1,550/oz and $1,555/oz, where we expect profit-taking stops to be placed," he added.

Looking ahead, with Iran almost certain to retaliate in some way for the US airstrikes, analysts see significant scope for gold prices to push higher.

"It is risk and uncertainty that we think will determine gold?s ability to post gains in the coming years. And given the political and geopolitical events on the calendar, we are certainly positive on gold?s price performance," RBC Capital Commodity Strategist Christopher Louney said in a note.

Saxo Bank's head of commodity strategy Ole Hansen told S&P Global Platts via email Friday: "Just like gold is reacting as a safe haven, it would take some degree of courage to sell crude oil given the current situation."

--Ben Kilbey, ben.kilbey@spglobal.com

--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com